19 September 2017

Bloomberg: ESMA set for power boost as Brexit, MiFID II loom

European Securities and Markets Authority will directly supervise critical market infrastructure including derivatives clearinghouses, data reporting services providers and financial benchmarks, according to a draft bill that the European Commission, the EU’s executive arm, plans to publish this week. It will also coordinate the work of national authorities to sharpen the EU’s supervisory focus.

At present, ESMA’s direct supervision is limited to credit-rating agencies and trade repositories, which collect and maintain records of derivatives. Bloomberg Trade Repository Limited, a subsidiary of Bloomberg LP, the parent of Bloomberg News, is authorized by ESMA to operate a trade repository.

As banks based in the U.K. make plans to relocate some operations and staff to the continent, officials have warned national governments against competing with one another by offering regulatory sweeteners, risking a race to the bottom. A more coordinated approach among member states could address such concerns, according to the commission.

To fund the new tasks, financial firms will be expected to directly finance their supervisors. ESMA, EIOPA and the EBA are currently funded by national authorities and the general EU budget. Under the new rules they would rely on annual contributions from financial firms that are indirectly supervised, fees from directly supervised companies and a “balancing contribution” from EU coffers.

“In some areas we can go further on the path towards supervisory convergence,” Valdis Dombrovskis, the European commissioner in charge of financial-services policy, said Sept. 14 in Tallinn. “It is easier to operate across the single market when you have a single supervisor looking at your entire operations.”

EU member states as well as the European Parliament will discuss the proposals after they’re officially presented.

Full article on Bloomberg

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