European regulators are stepping up efforts to simplify market rules and supervision as part of a broader push to boost competitiveness, but they warn that reducing complexity must not come at the expense of financial stability.
Speaking on a panel at FIA’s International Derivatives Expo in London on 17 June, officials from the European Commission, Autorité des Marchés Financiers, ESMA, the Bank of England and the UK Financial Conduct Authority discussed efforts to simplify market rules, reduce reporting burdens and reform market structure and clearinghouse supervision.
Anna Grochowska, deputy head of unit at the European Commission's Directorate-General for Financial Stability, Financial Services and Capital Markets Union, said the EU’s Market Integration and Supervision Package (MISP) spans trading, post-trading, asset management and fintech, and is aligned with the bloc’s Savings and Investments Union agenda.
On the trading side, Grochowska said the Commission wants to harmonise regulatory approaches across member states, including by moving some requirements from directives into regulations so they apply consistently across the EU. “We want to make sure member states do not set additional requirements,” she said.
Grochowska pointed to measures aimed at improving efficiency and competitiveness, including support for intra-group outsourcing, better access by trading venues to multiple CCPs and central securities depositories, and consolidated tape initiatives.
The Commission is also focusing on supervision, with an emphasis on simplifying the rulebook and ensuring consistent enforcement across member states.
“Central supervision is something that really underlies all the elements because currently we have different interpretations of law across 27 member states. We have a lot of supervisory divergence,” Grochowska said. “What we need is principle-based regulation – simpler regulation – but better enforcement, better supervision…a common mindset interpreting these rules in the same way across the EU.”
The comments come as the Commission proposes expanding ESMA’s role in overseeing certain significant cross-border market infrastructures and crypto-asset service providers. The proposal is intended to reduce fragmentation and make EU capital markets more integrated, but remains sensitive because it would shift some supervisory authority away from national regulators.
Centralised supervision
Patrice Aguesse, head of the market regulation division at the Autorité des Marchés Financiers, said the AMF supports more centralised supervision, particularly for central counterparties, arguing that a single supervisor could bring greater predictability and agility.
Although the European Market Infrastructure Regulation provides a single rulebook, firms can still face different interpretations from national competent authorities, he said. A more centralised model could help streamline authorisations and model approvals.
“It’s a way to speed the decision,” he said. “It is always easier to have only one supervisor, to have a quick answer to a market change or to a crisis.”
Aguesse added that centralisation should not create overlapping mandates, additional supervisory layers or unintended compliance burdens that could undermine competitiveness.
Klaus Löber, chair of ESMA’s CCP Supervisory Committee, said the debate over centralised supervision is often framed too narrowly as a choice between national authorities and ESMA.
“We are not starting from scratch,” he said, noting that ESMA has built significant supervisory expertise over its 15-year history and already has powers across several areas of EU financial markets.
In the CCP space, Löber said ESMA has a “robust mix” of direct supervisory powers, chairs all 14 EU CCP colleges and has a horizontal view across EU and third-country CCPs, giving it an important role in promoting consistency across clearing supervision.
He added that ESMA is already working to shorten time to market, centralise the use of data and streamline reporting, helping to build processes that could support further supervisory integration.
At the same time, he acknowledged that the current structure remains complex, with ESMA’s CCP Supervisory Committee operating alongside national supervision and college arrangements.
“It comes in parallel to the colleges, it comes on top of supervision performed at the national level, so it’s complex and clearly there is potential to streamline here,” he said.
Löber said further streamlining could improve efficiency, particularly in post-trade, where ESMA has already built significant supervisory and quantitative expertise and the number of entities is relatively contained.
UK reforms
From the UK perspective, Jon Relleen, director of infrastructure and exchanges, supervision, policy and competition – markets at the FCA, said the regulator is midway through a multi-year programme to reform capital markets rules across primary, secondary and post-trade activities.
He said the FCA is taking a pragmatic approach focused on improving how markets function, noting that clearer, more effective rules often support both market integrity and competitiveness.
“If we’re thinking about the first two, we’re usually meeting the competitiveness objective anyway,” he said.
He pointed to primary market changes, reforms to the transparency regime for bonds and derivatives, and adjustments to commodity derivatives position limits and clearing thresholds. The FCA is also working with HM Treasury on a review of EMIR Title II.
Sasha Mills, executive director of financial market infrastructure at the Bank of England, said competitiveness and innovation ultimately depend on a stable financial system.
“You need financial stability,” she said. “These other things are launched off that stability.”
As the UK repeals and replaces elements of UK EMIR, Mills said the Bank is aiming to preserve international standards while applying rules in a more pragmatic and technology-neutral way. Targeted changes are intended to help firms bring products to market more quickly without changing the underlying risk framework.
She also highlighted international work on margin transparency and predictability, noting that recent volatility has underlined the importance of clearer communication from CCPs on potential margin calls.
Simplification
The panel also discussed rulemaking and implementation burdens, including industry concerns about being asked to prepare for compliance before detailed technical standards are finalised.
Grochowska said simplification and burden reduction are high on the Commission’s agenda. In addition to the MISP, she pointed to work on sustainability disclosures, benchmark administrators and securitisation, as well as efforts to prioritise the most critical implementing measures.
She also highlighted the Commission’s use of “reality checks” with industry and its work with ESMA on transaction reporting rationalisation. However, she cautioned that simplification has limits. “Simplifying does not mean deregulating,” she said.
Relleen said transaction reporting remains a significant challenge. The FCA has already removed some duplication in the UK MiFIR regime, including overlaps with EMIR, and is working with the Bank of England on a broader review across MiFIR, EMIR and SFTR.
He added that UK authorities are coordinating with ESMA and EU counterparts to minimise unnecessary complexity for cross-border firms, even if the resulting frameworks are not fully aligned.
The overall message from regulators was that simplification, consistency and efficiency are increasingly important priorities on both sides of the Channel.
Clearer rules, streamlined processes and reduced duplication can make markets more accessible and effective, but only if reforms preserve resilience.
