In January 2011, a new European system of financial supervision (ESFS) was established, replacing the former supervisory committees and creating three supervisory authorities (ESAs): European Banking Authority (EBA), European Securities and Markets Authority (ESMA) and European Insurance and Occupational Pensions Authority (EIOPA) and a macro-prudential supervisor, the European Systemic Risk Board (ESRB).
On 20 September 2017, the European Commission published a revision of the European Supervisory Authorities framework. The revision initially gave new supervisory powers to the ESAs, modified their governance structure and granted ESMA the role of direct supervisors of managers of funds labelled as EuVECAs and ELTIFs. It also made changes to the ESAs funding model, by replacing the contributions by national competent authorities with direct contributions from the industry.
All these controversial amendments were ultimately rejected by the Council and the European Parliament in the final agreement reached at the end of March 2019. Instead, the new framework will only differ from the previous one on limited aspects, such as the role of the Chairperson, the peer review process and the relationship of ESMA with third country authorities.
Given the importance of ESMA in setting the regulatory and supervisory framework in which private equity managers operate and of the other ESAs in shaping legislation directly affecting investors, Invest Europe has been actively involved in the review process since the start.
While Invest Europe wants to ensure that ESAs have the resources and expertise that they need to deliver high-quality regulatory oversight, the proposal to reform their financing needs to avoid simply placing additional costs on those market participants who already contribute extensively to the costs of their supervision at national level.
Furthermore, changes to ESMA powers proposed in the revised Regulation risk having an impact on the way our industry is supervised.