ESMA SMSG own initiative report on the future of supervision for EU financial markets

ESMA's Securities and Markets Stakeholder Group (SMSG) has published an own initiative report on the future of EU financial markets supervision in the context of the ongoing Level 1 discussions on the European Commission's proposed Market Integration and Supervision Package (MISP). The report supports the objective of strengthening EU-level supervision and recognises the case for expanding ESMA's direct supervisory and supervisory convergence powers to address market fragmentation, cross-border activity and regulatory arbitrage. However, it stresses that any reforms should be proportionate, evidence-based and accompanied by a clear allocation of responsibilities between ESMA and national competent authorities to avoid duplication and inefficiencies. The SMSG highlights the importance of maintaining investor protection while supporting the competitiveness, attractiveness and growth of EU capital markets, including through a proposed "Competitiveness and Attractiveness Check", and key performance indicators as part of the accountability process of ESMA's chair. However, the report emphasises that retail investors must remain at the centre of ESMA's strategic priorities and also proposes retail investor impact assessments for ESMA measures so that investor protection considerations are not subordinated in practice to competitiveness arguments.

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