Key Takeaways from ESMA’s 2021 Work Programme

In an effort to reinforce its commitment to strengthen investor security and promote healthy and orderly capital markets, the European Securities and Markets Authority (ESMA) has released its 2021 Work Programme, setting out its goals and focus areas for the upcoming year.

The activities planned by ESMA for 2021 will overcome the concerns facing the EU, its capital markets and its people, including building a retail investor platform to support the Capital Markets Union (CMU), fostering sustainable finance and long-term markets, addressing the opportunities and risks raised by digitization, strengthening the role of the EU in global financial markets and retaining a proportionate approach to regulation.The ESMA faces another year of transition in 2021, not just in terms of its regulatory obligations, but also in terms of organization, as stated by Chair Steven Maijoor.

“On the regulatory front we have more supervisory responsibilities, following the ESA’s Review, for certain central counterparties, benchmarks and securitisation repositories, in addition to our existing supervision of credit rating agencies and trade repositories, while much of our single rulebook and supervisory convergence work will focus on supporting the development of the Capital Markets Union and addressing the impact of both COVID-19 and Brexit on the EU’s markets and investors.”

The work programme sets an ambitious timeline for 2021, which we believe will allow the Authority to contribute to addressing the challenges facing the EU stock markets by achieving its sustainability, orderly markets and investor protection initiatives.

The main areas of focus under its supervisory convergence, risk assessment, single rulebook and direct supervision activities will be:

1. Supervisory Convergence: Building an EU common risk-based and outcome-focused supervisory culture will be a priority. The focus areas will include fund liquidity risk and liquidity management tools, cost and performance of retail financial instruments, data quality and usability, oversight of ESG reporting and use of ESG data, and EMIR implementation.
2. Risk Assessment: Concentrate on incorporating the current focus on financial innovation and ESG into the Authority’s risk analysis, providing risk-based supervision data and promoting policy and convergence work.
3. Single Rulebook: Key aspects will include legislative evaluations of MiFID and AIFMD and the detection of potential improvements to the rulebook in support of the CMU. Furthermore, following adjustments to the EMIR review and EMIR Refit, technical requirements may be checked where appropriate, which may include clearing thresholds and obligations depending on market developments.
4. Direct Supervision: Focuses on the central counterparty supervision of third countries as vital financial sector infrastructures under EMIR 2.2 and preparations for new supervisory mandates concerning metrics and providers of data services.

In Summary

One Mission: To enhance investor protection and promote stable and orderly financial markets.

Four Activities:

• Promoting supervisory convergence
• Assessing risk to investors, markets and financial stability
• Completing a single rulebook for EU financial markets
• Direct supervision of specific financial entities

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