ESA review: a milestone has been taken but the clock is ticking…

ABBL Published 11.01.2019

This Thursday morning, 10 January 2019, the European Parliament’s Economic and Monetary Affairs Committee adopted its mandate to negotiate the review of the European Supervisory Authorities with the other co-legislator, the Council of the European Union.

The European Supervisory Authorities, operational since January 2011, are three in number: EBA in charge of banking, ESMA in charge of the securities markets and EIOPA responsible for the area of insurance and pensions. They have a mostly coordinating and harmonizing role when it comes to the application of EU law by the National Competent Authorities (NCAs). In Luxembourg these are the CSSF and the Commissariat aux Assurances.

The review had been initiated in September 2017 by the European Commission with the aim of strengthening the ESAs by increasing their powers as well as changing their internal functioning. The Commission was aiming at a shift of control from the national supervisors to the ESAs. Among others it proposed to hand the supervision of a certain number of investment funds and prospectuses to ESMA, that the ESAs would get a de facto last word when it comes to authorizations involving the delegation or outsourcing of substantial activities to third countries as well as to create a powerful internal Executive Board that would take on its own a number of critical decisions bypassing the Board of Supervisors.

In Thursday’s vote the part on direct supervision of investment funds has been scrapped although the European Parliament holds on to the supervision of certain prospectuses by ESMA. MEPs also deleted the de facto last word of the ESAs on delegation / outsourcing authorizations but kept some of the centralizing aspects of European Commission’s governance proposals.

After a working document in January 2018, a draft report half a year later, 1183 amendments by other MEPs, weeks and months of diligent hammering out of politically sensitive compromises, a change of co-rapporteur and now a vote in parliamentary committee, the European Parliament is ready for inter-institutional negotiations known as trilogues.

Time is nevertheless running out with the May European elections on the horizon. Indeed the last plenary session to rubberstamp a potential future trilogue deal will be held in April. In practice this means that not only successful negotiations need to take place in the Council to come to a common position but also subsequently conclusive negotiations between the EU institutions before early / mid March.  Not to mention that there are seven other trilogues ongoing under the same conditions and that resources are limited. That looks very much like a daunting task. Indeed the Romanian Presidency of the Council has therefore suggested to limit the trilogue negotiations on the part of enhanced AML powers for EBA where the Council has already since December last year a negotiating position. This is a reasonable suggestion given the circumstances. MEPs would surely have preferred a deal on the whole package now that they have their negotiating mandate, but realism would dictate that so close to the European elections, it is better to have a success on a small part (AML powers for EBA) rather than a big failure on the whole package.


By Antoine Kremer, ABBL & ALFI Head of European Affairs.


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