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| European Securities and Markets Authority (ESMA) | |
|---|---|
| Name | European Securities and Markets Authority |
| Formation | 2011 |
| Type | Agency of the European Union |
| Headquarters | Paris, France |
| Leader title | Chair |
| Parent organization | European Union |
European Securities and Markets Authority (ESMA) The European Securities and Markets Authority (ESMA) is an independent European Union regulatory authority created to enhance the stability and integrity of capital markets across the European Union; it interacts with national competent authorities such as Autorité des marchés financiers and Financial Conduct Authority and with supranational institutions including the European Commission and the European Parliament. ESMA's remit spans securities markets, investor protection, and market infrastructure, coordinating among bodies like the European Central Bank, the European Investment Bank, and the European Banking Authority while contributing to frameworks influenced by instruments such as the Markets in Financial Instruments Directive and the Market Abuse Regulation.
ESMA was established in response to systemic lessons from the Global Financial Crisis of 2007–2008 and proposals originating in reports linked to the Group of Twenty and the Liikanen report, following political decisions in the Treaty of Lisbon context and initiatives by the European Commission chaired by José Manuel Barroso. The authority succeeded or complemented predecessors including the Committee of European Securities Regulators and works alongside other European Supervisory Authorities created under post‑crisis reforms, notably the European Banking Authority and the European Insurance and Occupational Pensions Authority. Its creation was debated in sessions of the European Parliament and shaped by concerns voiced by national capitals such as France and Germany and by regulatory thinkers associated with institutions like the International Monetary Fund and the Organisation for Economic Co-operation and Development.
ESMA's mandate is grounded in secondary legislation including the Regulation (EU) No 1095/2010 establishing the authority and is implemented in conjunction with legislative packages such as the Markets in Financial Instruments Directive II (MiFID II), the Market Abuse Regulation (MAR), and revisions to the Prospectus Regulation. Its powers derive from treaties ratified by member states of the European Union and interact with judicial interpretations by the Court of Justice of the European Union and political oversight by the Council of the European Union. ESMA issues technical standards and guidelines that complement directives and regulations enacted by the European Commission, and its instruments are relevant to institutions such as credit rating agencies and central counterparties operating under regimes like the European Market Infrastructure Regulation (EMIR).
ESMA's governance includes a Board of Supervisors composed of heads of national authorities such as BaFin and Comisión Nacional del Mercado de Valores; an Executive Director and a Chair who liaise with bodies including the European Securities Committee and the European Systemic Risk Board. The authority maintains internal units for areas such as market operations, enforcement, and data analytics, interacting with agencies like the European Banking Authority and the European Insurance and Occupational Pensions Authority. ESMA's secretariat operates from offices in Paris, with committees that convene experts from national regulators and representatives from entities such as Bloomberg L.P. and Euronext for technical consultations.
ESMA develops binding technical standards, guidelines, and recommendations that affect entities including investment firms, asset management companies, and credit rating agencies. It has the power to register and supervise pan‑European entities such as credit rating agencies and certain trade repositories under EMIR, and to issue warnings and opinions that shape market practice in compliance with regimes like MiFID II and MAR. ESMA engages in regulatory processes that interface with directives influenced by stakeholder groups including the International Organization of Securities Commissions and trade bodies such as the European Fund and Asset Management Association.
While national authorities retain primary supervisory responsibilities, ESMA can act directly in cases of cross‑border risks or inconsistent application of Union law; tools include the ability to issue coordination decisions, temporarily ban or restrict financial instruments, and propose fines via national enforcement mechanisms, drawing on examples set in disputes involving entities like Credit Suisse and events such as the aftermath of Lehman Brothers. ESMA conducts peer reviews and stress testing exercises analogous to programs run by the European Central Bank and publishes supervisory convergence reports, cooperating with enforcement bodies such as national prosecutors and market regulators including the Securities and Exchange Commission in transatlantic dialogues.
ESMA drafts regulatory technical standards and implementing technical standards which are endorsed by the European Commission and can be reviewed by the European Parliament and the Council of the European Union. Its policy work covers transparency, market data, product governance, and benchmark administration under frameworks exemplified by the Benchmark Regulation, influencing market infrastructures like central securities depositories and central counterparties. ESMA solicits input from stakeholder consultations involving institutions such as IOSCO, European Systemic Risk Board, industry associations like ISDA, and academic centres at universities such as London School of Economics.
ESMA maintains memoranda of understanding and cooperation with third‑country regulators such as the United States Securities and Exchange Commission, the Financial Services Agency (Japan), and the Australian Securities and Investments Commission, and it participates in international fora including IOSCO and the Financial Stability Board. It negotiates equivalence assessments with jurisdictions like United Kingdom post‑Brexit and engages in regulatory dialogues with markets such as Switzerland and Singapore, coordinating cross‑border supervision of entities operating across exchanges like NYSE Euronext and Deutsche Börse.
Category:European Union agencies Category:Financial regulation