Financial Services Supervision in the EU after the Financial Crisis: The Proposed Role of the European Securities and Markets Authority
The lecture will take place at 6:00pm next Thursday, 15 July 2010, in the School of Law, TCD (map here), and all are welcome.
In the 1980s, the European Community established the pillars of the financial services single market (specially mutual recognition of prospectuses in cases of IPOs and admission to listing, UCITs and a basic financial services legal framework). But the regulation was incomplete, fragmentary and didn’t achieve the freedom of financial services across Europe. At the beginning of the 21st century the Commission promoted an ambitious programme, endorsed by the Council and the Parliament, in the financial services area.
But the functioning of the EU markets, and the globalization of the financial services have shown that it is not enough for the investor protection. So trying to reach a more sound and effectiveness integrated market, not only in relation to law but also in relation to enforcement, the Commission wants to move forward. So in 2009 began the reform of the system at EU level. The financial crisis in 2007/2008 exposed important shortcomings in financial supervision, both in particular cases and in relation to the financial system as a whole. Nationally-based supervisory models have lagged behind the integrated and interconnected reality of European financial markets, in which many financial firms operate across borders. The crisis exposed shortcomings in the area of cooperation, coordination, consistent application of Union law and trust between national supervisors
The crisis provides an opportunity to put into effect a major reform of the supervisory system. Filling in the gaps in financial sector regulation and strengthening the supervision of the financial sector in Europe have been the two main strands of work. To this end, the Commission has put forward legislative proposals (pdf) to transform the European Committees of supervisors into supervisory authorities with real teeth. They are called European Supervisory Authorities. It is envisaged that the European Securities and Markets Authority (ESMA) will as a body with autonomous standing will act to improve the functioning of the internal financial services market in particular by ensuring an effective and consistent level of regulation and supervision. The Commission adopted in October last year a Proposal for a Directive of the European Parliament and of the Council amending Directives in respect of the powers of the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority. Last Wednesday (7th July) the European Parliament delayed voting on the Proposal, by postponing the vote on the draft Legislative Resolution and referred back the matter to the Committee responsible for reconsideration. Professor Palá believes that political concerns in relation to this new Financial European Architecture are delaying the implementation of the new system.