A supervisory architecture fit for CMU: Aiming at a moving target?

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CMU features an extreme heterogeneity of i) market players (issuers, intermediaries, infrastructures, service providers) and ii) products, and a ‘variable geometry’ of their European regulation and national or European supervision. The time has come to accept that, at least where we are confronted with regulated industries as it is the case with financial markets, delegation to an EU agency of the technical task of administering and enforcing Level 1 sectoral regulation (and completing it via regulatory and implementing rules) is sound policy in compliance with the Treaties. Due to the uneven stage of development of the Banking Union and CMU, one institutional model or template cannot fit all.

The purpose of the ESAs’ reform is two-fold. On the one hand, it is aimed at furthering the parallelism, removing some existing discrepancies in the founding regulations on tasks and powers in Article 8 (extending to ESMA and EIOPA the power to adopt supervisory handbooks and rules on stress testing, already granted in 2010 to EBA). On the other hand, the reform deepens the divide between ESMA on one side, and EBA and EIOPA on the other side, because it envisages the conferral of additional direct supervisory remits to ESMA (alone). Investing more in the ESAs, and in ESMA in the first place, is a necessity in the new and very challenging FinTech context in which the supervisory system is bound to live; the system must rapidly evolve into a data-intensive, new-generation tech-authority (SupTech). 

Marco Lamandini is Professor of Corporate and Capital Markets Law at the University of Bologna and Member of the Academic Board of ECMI. He also sits on the Board of Appeal of the ESAs – appointed by ESMA and the Appeal Panel of the SRB.