The European Securities Markets Authority has released its 2020 Annual Report, which provides a review of work conducted over the year and assesses its performance against its goals of advancing investor protection and promoting stable and orderly financial markets.
This reflects on a year which brought amendments to the European Market Infrastructure Regulation (EMIR 2.2) and also refinements to ESMA’s governance and responsibilities under the revised ESMA regulation.
Among ESMA’s primary achievements, the report highlights its role in promoting consistency of financial supervision, or “supervisory convergence”, across the EU. This involves application of a common supervisory culture and common supervisory practices across EU member states and the European Economic Area.
At the forefront of this activity was the authority’s response to the Wirecard case, relating to alleged accounting errors and malpractice at the German payments company. ESMA provided a comprehensive report, with policy recommendations in November, and subsequently issued proposals for an enhanced peer review framework.
ESMA also published a report on liquidity risk in investment funds and issued its first common supervisory action with national regulators relating to MiFID II suitability rules across the EU.
As part of its core regulatory responsibility for assessing risks to investors, markets and financial stability, the authority focused on validating the quality of data reported to ESMA and to disseminating its risk data and metrics via its annual statistical report series.
A third component of ESMA’s responsibilities centre on directly supervising specific financial entities. In the clearing space, the authority oversaw the creation of a central counterparty supervisory committee, while also monitoring restructuring of the trade repository environment within the EU.
Finally, ESMA played an active role in crafting a Single Rulebook for EU financial markets. This included the publication of ESMA’s strategy on sustainable finance and its contribution to the European Commission’s CMU action plan and the Commission’s digital finance strategy.
ESMA interim chair Anneli Tuominen says: “The past year has been challenging and transformative for ESMA. We have been at the forefront of responding to the impact of Covid-19 and Brexit on EU financial markets, while assuming new powers and supervisory responsibilities under the ESA’s Review and EMIR 2.2.
“ESMA enters its second decade as an established regulator with solid foundations, thanks to its former senior management, fit to meet any challenges the new decade poses to investor protection, order and stable financial markets.”
