The European Securities and Markets Authority: Accountability Towards EU Institutions and Stakeholders

by Carmine Di Noia and Matteo Gargantini

MPILux Working Paper 2 (2013)
Wharton Financial Institutions Center Working Paper #13-31

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ABSTRACT: The creation of the European Securities and Markets Authority (ESMA) has marked a major step towards more integrated rulemaking and supervision in the European financial market sector. ESMA organization and operations are strongly influenced by the position of the new Authority within the EU institutional framework. While ESMA governance still displays some features of a network among national supervisors, its quasi-regulatory functions and supervisory tasks are constrained by limitations directly or indirectly dictated by the Treaties. The paper highlights how the traditional concepts of independence and accountability towards EU Institutions and stakeholders apply to ESMA. ESMA's relationships with national competent authorities, which retain direct supervisory powers with limited exceptions, and the EU Institutions, which are competent for the adoption of legislative and non-legislative regulatory measures, are also considered. The analysis shows that tasks conferred to ESMA fall short to match its relatively high accountability, which is on the contrary aligned with international best practices. The EU Commission announced a possible revision for the European Supervisory Authorities (including ESMA) framework for 2014: we suggest therefore some reform proposals that could help streamline regulatory and supervisory functions at EU level, thus allowing ESMA to better exploit its potential while avoiding the risk of excessive centralization of supervisory powers.

KEYWORDS: European Securities and Markets Authority (ESMA); Securities and Markets Stakeholder Group; financial regulation and supervision; rulemaking; independence; accountability; delegation of powers; Meroni; Romano.

Forthcoming in: Pablo Iglesias Rodriguez (ed.), Building Responsive and Responsible Financial Regulators in the Aftermath of the Financial Crisis, Intersentia, Cambridge – Antwerp - Portland (ISBN: 9781780681795)