ESMA given new powers to increase cross-border supervision

The EU authority’s new powers include increased oversight of third-country equivalence assessments working alongside the European Commission.

The European Securities and Markets Authority (ESMA) has been given new powers that will increase its cross-border and non-EU supervision capabilities.

Among its new powers and responsibilities is a new role overseeing third-country equivalence assessments, which includes monitoring regulatory and supervisory developments in equivalent non-EU countries, and assisting the European Commission in preparing equivalence decisions.

It will also have direct supervision of third-country central counterparties (CCPs), such as the UK’s LCH, and of critical third-country benchmarks and data service providers from 1 January 2022.

“One of our key priorities is ensuring the consistent and coherent implementation of the Single Rulebook and, with our new powers in this area, we will adopt a risk-based approach, in cooperation with national authorities, to supervisory convergence across the EU,” said Steven Maijoor, ESMA chair.

“While we will evolve further as a direct supervisor, with responsibility for critical benchmarks and data service providers and third country CCPs, prioritising those areas posing the greatest risks to our objectives.”

The new powers and responsibilities follow the European Commission’s recent ESA (European Supervisory Authorities) review and EMIR 2.2. UK clearing houses were recently granted an extension of temporary equivalence, allowing CCPs and central securities depositories (CSDs) to continue servicing euro-denominated products.