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Enhancing European Financial Regulation: ESMA's Crucial Role

Explore the current challenges in financial regulation and the new EU system introduced for safeguarding financial stability, including the transformation of committees into European Authorities. Understand ESMA's objectives, tasks, and powers in improving market functioning, regulation consistency, investor protection, and financial system stability.

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Enhancing European Financial Regulation: ESMA's Crucial Role

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  1. Currentchallengesofthefinancialregulationandsupervision New European Union System for Safeguarding Financial Stability

  2. Current situation 3 committees exist in financial services sector at EU levelwith advisory powers (Lamfalussy level 3 Committees): • Committee of European Banking Supervisors (CEBS), • Committee of European Insurance and Occupational Pensions Committee (CEIOPS) • Committee of European Securities Regulators (CESR).

  3. Changes due to financial crisis • High-level group chaired by J. de Larosière recommended transforming the three Committees into European Authorities (Micro prudential supervision) • Introducing Macro-prudential supervision to limit the distress of the financial system as a whole in order to protect the overall economy from significant losses in real output

  4. Source: de Larosiere Report

  5. The European Commission takes over • Creation of a new European Systemic Risk Board (ESRB) and • European System of Financial Supervisors (ESFS), composed of new European Supervisory Authorities • Legislative proposals already exist • Supervisors should be established in the beginning of 2011

  6. EuropeanSecuritiesandMarketsAuthority (ESMA) • Part of European System of Financial Supervisors • Transformation from CESR to ESMA • Board of supervisors (heads of national supervisors) is decision-making body • Internal organization (Chairperson, Executive Director, etc.)

  7. ObjectivesoftheEuropeanSecuritiesandMarketsAuthority (ESMA) • Improving the functioning of the internal market • Effective and consistent level of regulation and supervision • Protecting investors • Ensuring the integrity, efficiency and orderly functioning of financial markets • Safeguarding the stability of the financial system • Strengthening international supervisory coordination

  8. Tasksandpowersof ESMA (1) • Develop technical standards • Powers to ensure the consistent application of Community rules • Action in emergency situations • Settlement of disagreements between national supervisory authorities • Colleges of supervisors

  9. Tasksandpowersof ESMA (2) • Common supervisory culture, delegation of tasks and responsibilities and peer reviews • Assessment of market developments • International and advisory role • Collection of information • Relationship with the ESRB • Safeguard

  10. Challenges in Slovenia • Adoption to the EU new supervision system (adjustment of the SMA, BS and ISA to the new system) • Development of Slovenian capital market (How to increase liquidity on LJSE?) • Introduction of new UCITS legislation • Pension reform (three pillars systemand new competencies for the SMA)

  11. Questionsforthespeaker Thank you for your attention

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