Speaking at the FIA Global Cleared Markets Conference in Boca Raton last week, senior regulators and policymakers highlighted plans to centralise oversight of key market infrastructures in the European Union, as part of a broader effort to make the bloc more competitive.
“A major priority for us is the reform of the supervisory architecture,” Martin Merlin, director, financial markets, DG FISMA at the European Commission, said on the panel.
In December, the Commission proposed shifting towards a single supervisor at the EU level for certain trading and post-trading infrastructures, a change Merlin described as a potential “game-changer.”
The proposal forms part of the Commission’s broader Market Integration and Supervision Package, a set of reforms aimed at addressing long-standing inefficiencies in Europe’s capital markets. Compared with the US, EU markets remain less developed, less liquid and more fragmented, with divergent national regulations and supervisory practices, according to the Commission. This has resulted in higher costs for market participants, fewer listings and missed innovation opportunities.
That fragmentation is particularly evident for cross-border firms. While US market participants typically deal with one or two regulators, pan-European infrastructures can face oversight from numerous national authorities.
“You can imagine the types of problems that this entails,” Merlin said. Despite progress in aligning supervisory practices, he argued that “we’ve reached the limits of what we can do with supervisory convergence.”
Under the Commission’s proposal, the European Securities and Markets Authority would take direct oversight of systemically important trading venues, central counterparties and central securities depositories. It would also become the sole supervisor for crypto-asset service providers, a step aimed at preventing regulatory arbitrage between member states.
Not all parts of the market would be centralised. Asset managers and investment funds would largely remain under national supervision, albeit with stronger coordination and oversight at the EU level for the largest players.
At ESMA, the direction of travel has broad support. Speaking on the panel, Klaus Löber, chair of ESMA’s CCP Supervisory Committee, said he “very much welcomed and supports the initiatives by the Commission to further enhance the capital markets in Europe.”
Still, the debate is far from settled. Questions remain over how far centralisation should go and whether a single supervisor is always the most effective model.
Carlo Comporti, a commissioner at Italy’s Commissione Nazionale per le Società e la Borsa, said there is “strong understanding and support” for more unified supervision across Europe, particularly given inconsistencies in how existing rules are applied. The EU already has a comprehensive rulebook, he said, but supervision varies across jurisdictions.
“The problem is that this rulebook is not necessarily applied in a consistent manner,” he said.
However, Comporti cautioned that a one-size-fits-all approach may not be appropriate. While centralised supervision could improve efficiency in highly integrated, cross-border markets, national authorities may still play an important role where local expertise and legal context are critical.
“Does it mean that we need a single supervisor? That is the tricky point,” he said, noting that discussions touch on issues of national sovereignty and remain inherently sensitive.
For now, the Commission is taking a targeted approach, focusing centralisation efforts on the most systemic and cross-border segments of the market.
The proposed reforms in the package form a central pillar of the EU’s Savings and Investments Union initiative, with Commission officials pushing to reach an agreement with lawmakers this year. If adopted, the new framework could come into force between 2027 and 2029.
Despite the sensitivities, the tone of the panel discussion suggested growing momentum behind reform. Panellists broadly agreed that more coherent supervision, whether through centralisation or tighter coordination, is essential to unlocking more integrated capital markets in Europe.
