The European Securities and Markets Authority and Its Regulatory Mission: A Plea for Steering a Middle Course

Abstract

The European Securities and Markets Authority (ESMA) has played a pivotal role in shaping the operation of the European supervisory structure since its establishment in January 2011. The overall objective of the European Supervisory Authorities (ESAs) is to safeguard the stability and orderly functioning of the European financial system. ESMA shall achieve this objective in the realm of European capital markets (securities trading). Against the backdrop of ESMA’s operation so far, this chapter will revisit from a scholarly perspective the organisational and operational design, tasks, powers and governance of ESMA. Focus is on ESMA’s regulatory role, not its supervisory mission. ESMA’s regulatory tasks are likely to keep it on top of the watch-list of the European Commission (Commission). In context with the Commission’s work on establishing a Capital Markets Union (CMU) the Commission has emphasized particularly the importance of well-regulated capital markets. Main areas for action in this context are linked to ESMA’s remit. Have ESMA’s design and powers allowed it to contribute adequately to the development of a high-quality single rulebook as an essential element of an enhanced regulatory harmonisation and coherence? Has ESMA’s institutional profile fostered or hindered it to become an efficient and effective ‘rule-maker’? What features of ESMA’s current design have proved themselves to be appropriate? Which of ESMA’s institutional characteristics remain areas of improvement with a view to ESMA’s regulatory mission?