ESMA principles on risk-based supervision

The European Securities and Markets Authority (ESMA) has published its non-binding principles for risk-based supervision to promote a common and effective EU-wide supervisory culture and strengthen the EU single market. These principles apply to national competent authorities (NCAs) and ESMA when exercising direct supervision, covering the identification, assessment, prioritisation and mitigation of risks across all mandates (markets, entities and products) within an authority's remit. While acknowledging that different models for risk-based supervision exist, ESMA introduces an entity-based approach that can be adapted to other models (such as transaction or product-based approaches) depending on an authority's supervisory processes. The principles are intended to guide supervisory practice rather than prescribe a single supervisory model or operate as a full manual. As non-binding guidance, they are intended to be implemented practically under the relevant authority's existing framework. ESMA and NCAs will work together to advance implementation and promote high quality supervisory outcomes for market participants.

Return to main website.