FESE fully agrees with the objectives of the ESAs review to reduce supervisory fragmentation and costs and ensure the same quality and reliability of data across the EU. Whilst we acknowledge ESMA’s intention to centralise the authorisation and supervision of DRSPs, there are some fundamental issues with the proposed fee framework which require further consideration.
The fees proposed by ESMA are remarkably high when compared to most of the fees currently levied by NCAs and seem disproportionate from a financial perspective as most DRSPs barely break-even. This is due to most DRSPs having to register to provide their clients with tools to comply with MiFID II/MiFIR obligations.
In a scenario where the scheme outlined by ESMA is mandatory, it is very unlikely that (many) DRSPs would be able to meet the imposed requirements which could result in them opting to close their business, drawing competence away from the financial landscape in the EU, undermining market integrity and transparency and the objectives of the CMU, especially given the additional challenges posed by Brexit in the upcoming years.
FESE believes that the revision of the fees and derogation criteria proposed by ESMA needs to be carefully assessed to understand the implications it will have on the industry and to determine the most proportionate and adequate framework for DRSP providers. FESE is fully committed to working closely with ESMA in ascertaining the best actions for the capital markets ecosystem.