21 May 2021

ALFI responds to the European Commission consultation on supervisory convergence and the single rulebook

As a general comment, in ALFI’s view, ESMA reaches its objective to protect the public interest by contributing efficiently to the short, medium and long-term stability and effectiveness of the financial system as stated in Article 1 of the ESMA Regulation.

The European Supervisory Authorities (ESMA, EBA and EIOPA) play a key role in the European System of Financial Supervision. Adopted in 2010 and revised in 2019, the ESMA Regulation creates a robust framework for the supervision and coordination of cross-border business activities, in particular within the EU internal market.

As a general comment, in ALFI’s view, ESMA reaches its objective to protect the public interest by contributing efficiently to the short, medium and long-term stability and effectiveness of the financial system as stated in Article 1 of the ESMA Regulation. We further believe that ESMA successfully contributes to the missions detailed in said article, including improving the functioning of the internal market, ensuring the integrity, transparency, efficiency and orderly functioning of financial markets and preventing regulatory arbitrage and promoting equal conditions of competition. We also support ESMA’s efficient role in enhancing supervisory convergence across the internal market.

ESMA provides a platform for the exchange and cooperation of National Competent Authorities. The powers and tools granted to ESMA allow the authority to ensure convergence in the asset management sector, which is important to ensure a level playing field across Europe. Investors benefit from a wide variety of investment products and they can rely on ESMA’s investor protection focus. This is the reason why as far as the topics raised in the above table are concerned, in our opinion ESMA’s impact is either significant or most significant. The only exception is probably financial innovation, where we have not (yet) seen evidence of a focus for ESMA’s actions.

The ESA review actually took place less than 18 months ago. Although we believe that this reform was impactful and we understand that it is undertaken as contemplated by article 81 of the ESMA Regulation, we do not have sufficient insight to perform a thorough assessment of the recent changes made to the ESMA Regulation.

Over the last 18 months, to our knowledge, ESMA has not used (or with respect to several powers/tools only on very limited occasions) all its additional and/or enhanced supervisory convergence tools. Moreover, as further described in this consultation, in our opinion – based on concrete experience – some of the supervisory convergence tools need to be improved (e.g. Q&As and Common Supervisory Actions).
Finally, ESMA will benefit from some new direct supervision powers that will take effect only as from 1 January 2022.

As a consequence, we do not see any need to grant any additional powers to ESMA and/or further increase the supervisory convergence tools at its disposal. We would rather suggest to ensure an appropriate and efficient use of the existing powers and tools and targeted improvements based in particular on the constructive feedback received from the industry.....

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ALFI

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