Shearman & Sterling LLP | Financial Regulatory Developments Focus | <p ><br > European Commission Legislative Proposals for Enhanced Powers for European Supervisory Authorities and the European Systemic Risk Board</p >
Financial Regulatory Developments Focus

  • European Commission Legislative Proposals for Enhanced Powers for European Supervisory Authorities and the European Systemic Risk Board

    The European Commission has published legislative proposals designed to strengthen and further integrate the supervisory framework of the European Union. The proposals build on contributions to the Commission's public consultation in autumn 2016 on the European Systemic Risk Board and its public consultation in spring 2017 on the European Supervisory Authorities – the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority.
    The proposals form the first step towards a single capital markets supervisor and towards completing the Financial Union (comprising the Banking Union and the Capital Markets Union) by 2019. The proposals provide for ESMA to become direct supervisor over certain sectors of capital markets across the EU. ESMA would be given new powers to: (i) authorize and supervise the EU's critical benchmarks and endorse non-EU benchmarks for use in the EU; (ii) approve certain EU issuer prospectuses and all third country prospectuses drawn up under EU rules; (iii) authorize and supervise European Venture Capital Funds, European Social Entrepreneurship Funds and European Long-Term Investment Funds, with the aim of creating a genuine single market for these funds; (iv) authorize and supervise data reporting service providers, a new regulated entity to be brought in under MiFID II; and (v) have a greater role in coordinating market abuse investigations in which there are cross-border implications or effects for the integrity of financial markets or financial stability in the EU. Where necessary, sectoral legislation would be amended to reflect ESMA's enhanced powers.
    The proposals make changes to the governance of the ESAs and the ESRB to allow a more streamlined decision-making process at EU level. Changes are also proposed to the funding of the ESAs, under which funding from national authorities would be provided directly by financial market participants.
    The proposals will now be considered by the European Parliament and the Council. Feedback can be provided to the European Commission on the proposals by January 16, 2018. 
    View the Commission Communication Summarising the Proposals.
    View the Proposals for Amendments to Sectoral Legislation:  ESAs' Founding Regulations, EuLTIF Regulation, EuVCF Regulation, EuSEF Regulation, MiFIR, Benchmarks Regulation, Prospectus Regulation, EMIR and MiFID II and Solvency II.

    View the Proposal for Amendment to ESRB Regulation.

    View the Commission Press Release.