Irish Stock Exchange plc, trading as Euronext Dublin
The Irish Stock Exchange plc, trading as Euronext Dublin, is a global leader in the listing of fund and debt securities with over 35,000 securities from 80 countries around the world listed on its four markets.
ID: 190087618732-70
Lobbying Activity
Response to Review of the European Supervisory Authorities
23 Jan 2018
The ISE welcomes the chance to provide feedback on the European Commission’s proposed ESA Regulation. Our comments focus specifically on the provisions relating to direct supervision, and in particular the proposals to amend the Prospectus Regulation. While we fully support the objectives of Capital Markets Union and believe the ESAs play an integral part in this, we are extremely concerned with the proposal to transfer the scrutiny and approval functions from NCAs to ESMA for certain prospectuses and would question whether it meets the principles of subsidiarity. We believe it would have a detrimental impact and disrupt an already well-established and efficient market which surely is contrary to the aims of CMU.
In summary, our key points on the proposal to amend the Prospectus Regulation are:
• Direct Supervision in the area of reviewing prospectuses is the wrong tool to improve harmonisation. We agree there is a need to promote supervisory convergence in order to ensure there is a level playing field, however the proposed direct supervision provisions distract from the real objective of strengthening the ESAs to deal with areas where there is pan-European systemic risk. Introducing changes to the supervision of specific products will only lead to bottlenecks on financial product issuance in Europe and reduce the capacity of issuers to raise capital in the EU which is likely to diminish the chances for CMU to succeed.
• There is no regulatory foundation for its inclusion, it was not part of the European Commission’s consultation on this topic and there is no rationale or evidence of regulatory arbitrage provided to support such a radical change in approach for prospectus scrutiny and approval. The impact assessment supporting the proposed legislation lacks substance, and we would question the accuracy of the prospectus numbers provided in it. There needs to be thorough analysis done that demonstrates the current regime has not achieved its objectives, and full details of the potential impact provided, before any such changes could be considered.
• The new Prospectus Regulation was only recently agreed and will be fully implemented in July 2019; the negotiations on the Regulation already included detailed discussions on the approval and scrutiny of prospectuses. The new Prospectus Regulation regime needs to be in force for a reasonable period of time and then assessed fully before making further changes; otherwise it makes EU law look uncertain and unpredictable.
• National Competent Authorities (NCAs) have already developed very specific experience and expertise to review these prospectuses and have established very efficient and effective approval processes, and local ecosystems have evolved around this to create a well-functioning market – this established approach cannot be easily replicated. There are practical difficulties with how the proposal will work. ESMA staff will have to understand different legal structures, languages and have knowledge of various local sectors from every jurisdiction. There is likely to be duplication and an increase in costs, and there is significant concern amongst market participants that this will hamper efficiency which will be detrimental to the market, where time to market is critical.
For these reasons, we would strongly argue that the focus of the ESA Review should be on strengthening ESMA’s role within its existing structure and enhancing its current tools, such as developing peer reviews and improving its oversight of NCAs across the EU which should ensure further convergence and reinforce the EU’s single market, while still maintaining the essential role of NCAs. If the proposals for direct supervision remain, it could jeopardise the EU’s firmly established position as a leading market in listing these securities which will be to the detriment of EU capital markets as a whole.
Read full responseMeeting with Jonathan Hill (Commissioner)
28 Sept 2015 · Markets in Financial Instruments Directive II/Capital Markets Union/Prospectus Directive