EU finance ministers have agreed the key elements of a negotiating position on new rules designed to deepen the bloc’s capital markets and shift more household savings into investment.
The measures form the stance of the EU Council on the market integration and supervision package, a set of proposals that would change how parts of the EU’s financial system are overseen and how firms operate across borders, the Council announced on Friday.
Under the Council’s position, supervision of the most significant cross-border trading venues and major “post-trading” entities — including central securities depositories (which hold and transfer securities such as shares and bonds) and central counterparties (which sit between buyers and sellers to reduce the risk of a trade failing) — would move from national regulators to the European Securities and Markets Authority (ESMA).
The Council said it would refine the criteria used to decide which market operators fall under ESMA’s direct supervision, and that the European Commission would have to review those criteria after two years for trading venues.
A new licence framework and changes for crypto firms
The Council’s position keeps plans for a pan-European market operator framework that would allow some venues to run multiple trading platforms across the EU under a single licence, with ESMA supervising them directly on a voluntary basis.
It also said that only the most significant cross-border crypto-asset service providers would be brought under ESMA supervision immediately, rather than applying a blanket approach to all such providers.
The package would create a new full-time ESMA executive board made up of a chair and five independent members to manage operations and take decisions on entities that ESMA supervises directly.
National authorities would retain a role through a separate board of supervisors that would remain ESMA’s main body for regulatory decisions, strategy and budget matters.
The Council stated that it also supports measures to reduce cross-border complexity for asset managers, including an optional “depositary passport” that would let investment funds appoint a depositary — the institution that holds a fund’s assets for safekeeping — in a different EU member state.
The Council added the package would also expand the EU’s “distributed ledger technology pilot regime”, a regulatory sandbox that allows firms to test trading and settlement using blockchain-style systems under controlled conditions.
Ireland’s finance minister Simon Harris said the agreement was a step towards a “deepened savings and investments union” that would help citizens and businesses use more integrated capital markets.
The negotiating position will be finalised before formal adoption by the Council, after which talks can start with the European Parliament once it has agreed its own stance.
