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ESMA commits to extensive programme on supervisory convergence

ESMA commits to extensive programme

ESMA’s 2017 Supervisory Convergence Work Programme aims to promote sound, efficient and consistent supervision across the European Union.

Julie Patterson

Wealth & Asset Management, EMA FS Risk & Regulatory Insight Centre

KPMG in the UK


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ESMA’s 2017 Supervisory Convergence Work Programme aims to promote sound, efficient and consistent supervision across the European Union. It commits itself and the national regulators (NCAs) to four main priorities: the implementation of MiFID II/MiFIR and MAR; improving the quality of data collected by the NCAs; investor protection issues when receiving services cross-border; and convergence in the supervision of EU central counterparties (CCPs). The programme is wide-ranging, though, and includes areas of work impacting each sector under its purview. Also, it comments on third country issues.

ESMA’s Supervisory Convergence Programme for 2007 is extensive. It covers eight cross-cutting activities and seven thematic activities, within which it cites four main priorities.

Ensuring the sound, efficient and consistent implementation of key new EU legislation – MiFID II/MiFIR and MAR are a priority here, but there must also be work on benchmarks, money market funds, security financing transactions, PRIIPs and EMIR.

Improving data quality – NCAs’ efforts will be focussed on preparing for and enforcing compliance with the various reporting requirements under MiFID II/MiFIR, EMIR and AIFMD. ESMA notes, for example, that poor quality of data in MiFIR transaction reports passed from one NCA to another will have a consequential impact on the receiving NCA’s analysis. It will focus on the development of supporting IT infrastructure.

Ensuring adequate investor protection in the context of cross-border provision of services – ESMA is determined to ensure that retail investors receive the same level of protection independent of the location of the firm providing the service. This is seen as important both to the free movement of services within the EU and to the success of the Capital Markets Union initiative.

Ensuring effective convergence in the supervision of EU CCPs – ESMA notes that potential risks linked to the increased systemic importance of CCPs persist. It aims to strengthen the robustness of CCPs and their supervision, including common supervisory practise, stress testing and mandatory peer reviews.

ESMA observes that the NCAs may need to acquire new technical expertise in previously unfamiliar areas and new technologies, and may face challenges in prioritising and allocating resources to new responsibilities. It will follow up identified deficiencies or non-compliance by NCAs with ESMA guidelines, promote discussions on emerging issues and provide remediation where necessary.

Its thematic activities will cover corporate finance, corporate reporting, fund management, investor protection and intermediaries, market integrity, post-trading and secondary markets. Each of these is important reading for relevant firms.

ESMA recognises the diversity of third country provisions under different EU legislative texts and the lack of an equivalence regime in some of them. It calls for clarification and consistent approaches at EU level. Meanwhile, ESMA must do work for MiFID II/MiFIR, awaits the Commission’s decision on the non-EU passports under AIFMD and will co-ordinate the implementation of various aspects of the General Data Protection Regulation.

For more information, contact Julie Patterson.

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