European Investors' Association
European Investors
European Investors was founded in the summer of 2015, following the observation that a true representative of retail investors was missing in EU policy debates while the need to ensure that retail investors and their interests are properly represented has neven been more apparent.
ID: 207975318825-41
Lobbying Activity
Response to Review of the European Supervisory Authorities
23 Jan 2018
EUROPEAN INVESTORS: REVIEW OF THE ESAs
European Investors welcomes the opportunity to respond to the proposal of the European Commission (EC) for a Regulation to strengthen the role of the European Supervisory Authorities (ESAs). Because of the constituency of European Investors, this response will mainly focus on the (future) role, governance and powers of the European Securities and Markets Authority (ESMA).
EXECUTIVE SUMMARY
European Investors strongly supports the creation of a harmonised European supervisory framework, under which ESAs cooperate closely with National Competent Authorities (NCAs) to ensure a well‐functioning supervisory system maintaining a high level of investor protection. Supervisory convergence is required where pan-European issues occur, particularly regarding cross-border investments, the competition between market participants and to prevent regulatory (forum) shopping or regulatory arbitrage.
European Investors believes the ESAs play an important role in reducing barriers to cross-border investment and ensuring best practice coordination and supervisory convergence across the European financial markets. Given the variation in financial services across the European Union (EU), the NCAs will predominantly operate in the local market, where differences may be driven by specific investors’ needs, national laws and language. Certain national issues regarding investor protection and intermediaries' rules, should be addressed first and foremost by NCAs. They have better knowledge of local market customs and the needs of issuers and (end) investors a true European capital market. Market participants and other stakeholders are also used to interact with the NCAs. Nevertheless, it is important that the ESAs make effective use of their existing powers to prevent any tendency for NCAs to introduce local requirements that raise unnecessary barriers to cross-border business and investments and thus constrain the Single Market from working in the best interests of investors.
The increase in the direct supervisory powers of ESMA related to European capital markets is relevant for investors given their pan-European dimension. The amendment of the Prospectus Regulation to transfer the approval of certain prospectuses and control over compliance of advertisements from NCAs to ESMA, is necessary to achieve a single capital market in the EU. Similarly, the centralised authorisation of third-country issuers and benchmark administrators is important to prevent any possibility of regulatory (forum) shopping.
European Investors welcomes the greater involvement of stakeholders through an additional role for ESAs’ Stakeholder Groups and consultative working groups. European Investors would advise the European Commission to include the Q&As with respect to the application of European legislation in the scheme of ex-ante consultation where ESAs should request opinions or advice from the various stakeholder and working groups. The conditions under which the consultative working groups are set up by ESMA need to be revised and enhanced as well as introduced at other ESAs. It might be in the interests of all ESAs, especially ESMA as an experienced user of feedback from working groups, to have even quarterly meetings with these consultative working groups to consult the market on the effectiveness of regulation and to assess new initiatives.
In its response European Investors further points to:
- The introduction of an Executive Board at the ESAs and the issues arising therewith;
- Data centralisation and the need for efficient reporting;
- The power to impose sanctions by ESAs and the issues that needs to be addressed;
- The funding of the ESAs and the negative consequences thereof for investors.
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