“With great power comes great responsibility.” Whether you credit it to Spider-Man’s Uncle Ben or the Bible’s Gospel of Luke (“to whom much is given, much will be required”), the message is timeless – and fitting for the European Commission’s next big move.
EU Commissioner Maria Luís Albuquerque recently announced that the European Commission intends to propose empowering the European Securities and Markets Authority (ESMA) as the central supervisor for the EU’s most significant cross-border entities – including central counterparties, central securities depositories, large trading venues and crypto exchanges. The formal proposal is expected in the coming weeks.
This move marks a potential turning point for oversight of Europe’s financial architecture. In line with the Savings and Investments Union, the Commission appears set to push for a more harmonised and simplified supervisory landscape – one that creates consistency and coherence across the single market, improves systemic risk management and reduces duplication.
Presently, a patchwork of national competent authorities polices Europe’s markets, each regulating financial markets within its own borders. While ESMA coordinates among them for CCP supervision, each authority operates under its own national legal framework. The result? Divergent interpretations of EU law, uneven enforcement and inconsistent supervisory practices – all of which chip away at the EU’s competitiveness and burden cross-border operators with unnecessary costs, complexity and legal uncertainty.
Beyond that, supervisors often lack a holistic view of cross-border entities and activities. When risks or misconduct spill over national lines, coordination can be slow or fragmented.
Empowering ESMA to directly supervise major cross-border players – those whose activities affect multiple member states – could change that dynamic. A single European lens could allow for faster, clearer decisions and fewer regulatory blind spots. It could also strengthen the EU’s collective ability to anticipate and respond to emerging risks in increasingly interconnected markets.
However, its success will depend on a pan-European supervisory framework that both increases competitiveness by eliminating gold-plating practices and avoids adding an extra layer of supervision and duplication of requirements on market participants. The last thing the industry needs is another layer of bureaucracy.
If ESMA is to assume direct supervision of CCPs, CSDs and large cross-border trading venues, its governance framework will need to evolve in step with its expanded mandate. It must be agile, well-resourced, equipped with the right expertise, and capable of working seamlessly with national supervisors, who bring essential market-specific knowledge and on-the-ground insight.
The forthcoming proposal will undoubtedly divide opinion, raising questions about national sovereignty. But if ESMA’s expanded authority is matched by accountability, agility and more effective governance, it could bring long-sought coherence to Europe’s financial landscape.
This is an opportunity to replace fragmentation with clarity and cohesion – and to prove that with great authority comes not only great responsibility, but also greater efficiency, resilience and purpose.
