The future of EBA, ESMA and EIOPA – European Financial Supervision consultation

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Today is the deadline for responding to the European Commission’s public consultation on the operations of the European Supervisory Authorities.

The consultation follows up on the earlier review in 2014, when the Commission decided it was too early to make changes to the legal framework of the Authorities, created in 2010.

Our consultation response addresses a few issues in addition to those covered in the previous blog:

  • The push to upgrade ESA Q&As to make them more similar to U.S. no-action letters.
    ESMA is now explicitly asking for suggested answers to its Q&As, which would suggest many in the industry now see the Q&As as a method of getting supervisors to rubber-stamp their suggested practise. However, as Q&As have no binding legal value and can be challenged in the Court of Justice, for instance by a competitor, these Q&As are creating an unreliable form of legal certainty, the very reason for their existence in the first place (Q5).
  • Comments on the Joint Committee and its difficulties to come to a common opinion, as evidenced by the 22 December 2016 letter to the Commission.
    The letter shows shows that divergences between the individual ESAs remain, and that part of the Board of Supervisors of one ESA can block adoption of a common Joint Committee advice. This issue should be addressed by revising decision-making structures in their individual Boards of Supervisors (Q6).
  • A more detailed analysis of the equilibrium between the co-legislators in terms of influence on the Level 2 process.
    Member States in general have a stronger impact on Level 2 decisions than the European Parliament. This is because in addition to the formal rejection powers (which the Parliament also has), the Member States 1) sit on the expert groups that advise the Commission during the drafting stage of delegated legislation and 2) those standards are based on ESA Technical Advice endorsed by the NCA-controlled Boards of Supervisors (Q22).

The full consultation response is available here.