EU countries agree to shift oversight of major financial markets to European authority ESMA
EU countries struck a deal on Friday to give the EU’s financial markets watchdog more powers, aiming to make cross-border investment easier and help businesses raise more money across the bloc.
Finance ministers from EU countries reached an agreement on Friday in Luxembourg to enhance the European Securities and Markets Authority (ESMA) as the primary overseer of major financial markets. This Market Integration and Supervision Package (MISP) intends to harmonize rules across the EU, thereby reducing fragmentation in financial markets.
The initiative aims to facilitate smoother savings and investments across borders, enabling companies to access capital and providing households with more avenues to earn returns on their savings.
ESMA would now assume direct control over significant trading venues, clearing houses, and securities settlement bodies, along with crypto-asset service providers. Additionally, a full-time, independent executive board within the watchdog will be established. Market operators can opt into a new EU-wide operating framework. These reforms seek to standardize national supervision and update regulations on trading, settlement of transactions, investment management, and the use of blockchain technology.
However, some trading venues operated by Deutsche Börse, which manages the Frankfurt stock exchange, might remain outside ESMA's direct supervision. Germany has secured an exemption for Deutsche Börse's domestically-focused trading venues, implying that a crucial part of the system will continue to be under regional German supervision. The specifics of this exemption were not disclosed in the announcement.
Dutch Finance Minister Eelco Heinen expressed his satisfaction with the agreement, stating it as a "major step forward" in advancing the Capital Markets Union. He highlighted that more progress was made in 10 months than in the previous 10 years. This development is seen as a significant milestone in the Savings and Investments Union (SIU), which aims to channel more European savings into investments that support the economy.
Proponents of integrated capital markets argue that such a move would lower costs, improve access to funding for companies, and provide savers and investors with a broader range of investment options.
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