ESMA believes that successful European capital markets require a strengthened EU framework. One that ensures consistent regulatory and supervisory outcomes for all EU market participants, and can adequately and efficiently mitigate cross-border risks. Our key proposals concern four main areas: (1) International aspects of EU financial markets; (2) Direct supervision; (3) Supervisory convergence; and (4) Access to data and reporting.
ESMA is ready to play a key role in third country issues, as it has the technical expertise to provide support to the legislative and policy processes. We think ESMA should be the central point for technical third country related issues, including equivalence assessments, and ongoing monitoring of regulatory and supervisory developments in the third country. We think such monitoring and assessments should be conducted more frequently than in the past, to detect on time any possible divergences between the EU and third countries.
It will be key for ESMA to have a strong role in ensuring consistent authorisation scrutiny and supervisory outcomes, avoiding a race to the bottom with the associated risks to investor protection and stability. While respecting that authorisation and supervision should continue to be conducted at national level for the vast majority of supervised entities, convergence measures should be considered in the case of cross-border authorisations, for example for MiFID, UCITS and AIFMD, to ensure that national decisions are consistent across the EU.
In the course of the UK withdrawing from the EU, UK-based market participants may seek to relocate entities, activities or functions to the EU27 in order to maintain access to EU financial markets. These may seek to minimise the transfer of the effective performance of those activities or functions in the EU27, for example by relying on the outsourcing or delegation of certain activities or functions to UK-based entities, including affiliates. It is therefore necessary to ensure that the conditions for authorisation as well as for outsourcing and delegation do not generate supervisory arbitrage risks.
Given the firm intention of the co-legislators and the Commission that the trading obligation becomes effective as soon as possible, we will only have a shortened consultation period of six weeks, and aim at delivering the draft RTS to the Commission in early autumn. ESMA is a firm believer in the positive effects the trading obligation will have on the transparency and competitiveness of derivatives markets. The G20 agreed on the trading obligation back in 2009, and implemented in the US since 2014. We therefore consider that all stakeholders have had sufficient time to prepare for the trading obligation, thereby allowing for its implementation in January 2018.
Contrary to some recent coverage and commentary, MiFID 2/MiFIR will come into effect on 3 January 2018, there will be no further delay in its implementation.
I believe that ESMA, having played a crucial role in addressing the regulatory reform in response to the crisis, has developed into an organisation with the drive, determination and, importantly, experience to deal with the challenges we continue to face. The withdrawal of the UK from the EU and the implementation and operation of MiFID 2/MIFIR are testing both regulators and market participants, but I am confident that we, at ESMA, have the capacity to meet these challenges and provide you with the support and guidance you need.
Hover over the blue highlighted
text to view the acronym meaning
over these icons for more information
No Comments for this Article