European Commission proposes new powers for ESMA to develop CMU

The European Commission wants to beef up the powers of ESMA to carry through CMU. 

The European Commission (EC) will look to strengthen the powers of the European Securities and Markets Authority (ESMA) as part of the Capital Markets Union (CMU) project. 

Following a mid-term review launched earlier this year, the EC has vowed to increase ESMA’s authority in order to “promote the effectiveness of consistent supervision across the EU and beyond.”  

Such a move would, according to the EC, ensure that a single set of rules is implemented in a uniform way across the single market.

The Commission also pledged to strengthen ESMA’s ability to identify and address weakness in national supervision as well as identify areas where the authority’s direct supervision may be required.

Other takeaways from the review include assessing the case of an EU licensing and passporting framework for FinTech activities.

This is part of the EC’s wider plan assessing how FinTech can contribute to capital markets through “data-driven solutions in asset management, investment intermediation and product distribution.”

In addition, a securitisation package, initially proposed in June last year, has been agreed by co-legislators.

It is hoped the package will free up capacity on banks’ balance sheets which could provide an additional €100 billion of funding to the European economy. 

“The CMU remains at the heart of our efforts to boost European investment and create jobs and growth,” said Valdis Dombrovskis, EC vice-president responsible for financial stability, financial services and CMU.

“As we face the departure of the largest EU financial centre, we are committed to stepping up our efforts to further strengthen and integrate the EU capital markets. This review makes clear the scale of the challenge and we count on the support of the European Parliament and member states to rise to it.”

Initially proposed in 2015 CMU had sought to harmonise a number of EU processes and introduce mechanisms by which to boost non-bank lending into the real economy. 

Experts had acknowledged it would take time to push through but engagement with the EC by the financial services industry had been positive.