EU Unveils Financial ‘Super-Regulator’ Plan

The European Commission unveiled on Thursday plans for a beefed-up “super-regulator” as part of an effort to unify financial markets in the hope of gaining autonomy from the United States.

Under the proposal, the European Securities and Markets Authority (ESMA) would take over supervision of cryptocurrency markets and the licensing of market players, supplanting national regulators across the 27-nation bloc.

It would also gain supervisory control over significant financial market infrastructure, such as stock exchanges, as well as post-trading service providers such as transaction clearing houses and depositories.

Supervision of large asset managers, ESMA would also fall under its remit.

“More integrated capital markets are essential for fortifying the EU’s economic strength and achieving strategic priorities such as competitiveness, digital and green transitions, defence and security,” the Commission said in a statement unveiling its proposals.

They mark a first step towards the creation of a unified capital market to help Europe’s flagging economies better compete against faster-growing ones in the United States and Asia.

The plan does not touch on the regulation and supervision of banks.

The Commission said EU financial markets remain fragmented, small, and lack competitiveness.

It noted that stock market capitalisation in the bloc is roughly 73 percent of gross domestic product, compared to 270 percent in the United States.

“Choosing not to act, sticking with the status quo, leads only one way: to a Europe that invests too little, grows too slowly and loses ground geopolitically and economically,” the EU’s financial services commissioner, Maria Luis Albuquerque, told journalists.

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The Commission said its proposals aim to allow market participants to operate more seamlessly across the bloc.

This would be done by increasing opportunities to transfer registrations across the bloc and to create a pan-European status for trading venues.

“Simplified access to capital markets reduces costs and makes the markets more appealing for investors and companies across all member states, irrespective of size,” said the Commission.

ESMA brings together representatives of national financial market regulators and currently plays a largely consultative role.

In order to carry out its new responsibilities, the Commission proposes to give it an independent executive.

The Commission’s proposals must now be negotiated with lawmakers in the European Parliament and member states for adoption.

Not all EU countries support transferring control over financial markets to the Paris-based ESMA, however.

Luxembourg — Europe’s leading asset management hub — is keen to maintain national regulation tailored to local needs.

Germany is also seen as keen to protect Frankfurt’s position in the financial world.

The transfer of the supervision and licensing of service providers related to crypto assets has also stoked controversy.

The role has been handled by national authorities under a European Union-wide cryptocurrency regulation launched late last year. But some countries have been accused of being too lenient, including Malta.

AFP