Centralise. Simplify…
Yesterday Brussels fired the starting gun on a new phase of capital-markets integration across Europe. The Commission’s “market integration and supervision” package is explicitly aimed at enlarging Europe’s capital markets that are presently too small and fragmented to finance significant economic transitions at scale or to compete with the depth and liquidity of larger markets.
At its core, the package would shift key supervision from national regulators to the European Securities and Markets Authority (ESMA) and standardise rules for trading, post-trade and asset management. A new “master” Regulation and Directive on capital market integration and supervision are designed to move large chunks of the rulebook into directly applicable EU law, cutting gold-plating and making cross-border “passporting” for venues, Central Securities Depositories (“CSDs”), investment funds (“UCITS”) and alternative investment fund managers (AIFMs — think hedge fund) more real than nominal.
The most politically sensitive move is a step towards an EU-level “SEC-style” supervisor. ESMA would gain direct supervisory powers over the most systemically important cross-border infrastructures – major stock exchanges, CCPs, CSDs – and over the largest crypto-asset service providers. In effect, the biggest crypto exchanges operating across the bloc would be overseen in Paris rather than by 27 separate national watchdogs, a clear stake in the ground for centralised crypto oversight.
The package also updates the Settlement Finality Regulation and removes obstacles to using DLT in post-trade plumbing, perhaps signalling an increasing openness to tokenisation and distributed ledgers in mainstream market infrastructure.
From here, the proposals enter the ordinary legislative procedure. The Parliament and Council will now begin what are likely to be protracted negotiations over how much power moves to ESMA and where to draw the line between “systemic” EU-wide players and purely domestic ones. Given the breadth of the master texts and sovereignty sensitivities, we can likely expect a multi-year process before the rules are agreed and phased in.
This is plainly not the end-state. The accompanying Communication trails further work on tax, corporate and insolvency law and macro-prudential oversight of non-bank finance – a broader re-wiring of the EU’s financial architecture rather than a one-off tidy-up.
For now, there is no direct impact on digital / XBRL-based disclosure. But a more powerful, data-hungry ESMA, plus increased reliance on DLT post-trade systems, will only reinforce the medium-term importance of high-quality, machine-readable reporting.
Dive into the details:
- Commission Q&A
- Commissioner’s speech
- Package hub with draft legislation.
