Joint statement: enhancing the EU legislative and supervisory framework to support EU market competitiveness

The Trade Associations urge EU policymakers to seize the opportunity presented by the Market Integration and Supervision Package (MISP) to introduce durable improvements to the EU’s regulatory and supervisory framework. Improving how financial services legislation is developed, implemented and supervised in practice is essential to deliver on our shared objectives of strengthening competitiveness and achieving impactful simplification.

MISP represents a key and timely opportunity to enhance the proportionality, predictability, and international competitiveness of the regulatory and supervisory framework. Central to this objective is the reduction of legal uncertainty and a more rigorous assessment of the costs and benefits associated with regulatory standards. Absent targeted policy action to address structural factors, there is a risk that the EU’s attractiveness as a global financial centre could be undermined.

Regulatory and Policy Activities – embedding a competitiveness objective into ESMA’s mandate

The Trade Associations consider it important that ESMA systematically assess the impact of its regulatory and policy activities on the attractiveness of EU capital markets. Introducing a secondary competitiveness mandate into the ESMA Regulation would help ensure that the development of its regulatory toolkit supports market integrity and efficiency in a manner that is genuinely proportionate to underlying risks and policy objectives, while also reflecting the global competitive position of EU markets.

In this context, we recommend the co-legislators to explicitly require ESMA to incorporate competitiveness considerations into its impact assessments and cost–benefit analyses. Furthermore, given ESMA’s responsibilities in regulatory approval procedures, for example in authorisations or model validations, this secondary objective should guide ESMA to adopt decisions for new solutions and products within clearly defined timeframes supporting a shorter time-to-market and fostering innovation.

Importantly, this proposed secondary objective should be pursued without prejudice to ESMA’s core objectives. Rather, it aims to complement them by introducing a dimension that has thus far been insufficiently reflected in the way ESMA approaches its regulatory activities.

Implementation of EU requirements – sequencing and no-action relief powers

Improving the sequencing and application of EU financial legislation is essential. In practice, requirements articulated in primary law often apply before technical standards are finalised, creating uncertainty, unnecessary costs and potential for duplicative implementation efforts. New obligations should apply only once supporting technical standards have been published and appropriate implementation periods for regulators and financial market participants are provided.

Enhanced regulatory flexibility, encompassing effective tools to address both misaligned timelines that can arise despite better sequencing, and unforeseen market developments, is crucial. This would equip EU authorities to respond proactively and effectively, fostering legal certainty and predictability for market participants, while also contributing to the competitiveness of the EU financial markets. In particular, we urge the co-legislators to establish credible no-action relief mechanisms that grant EU authorities the appropriate competences and powers to respond swiftly and effectively to situations requiring immediate intervention, thereby ensuring legal certainty and predictability, facilitating smooth transitions and avoid cliff-edge risks for financial market participants.

Supervision – avoid duplicative arrangements

The Trade Associations support effective, consistent and efficient supervision in EU markets. Any reformed supervisory model should avoid duplicative supervision and undue complexities resulting from insufficiently delineated responsibilities and hybrid supervisory arrangements, undermining the Savings and Investments Union (SIU) objectives of competitiveness and convergence.

Addressing these issues would enhance the overall effectiveness and coherence of the EU regulatory framework. This would support the objectives of the SIU by fostering deep, liquid and innovative markets that remain open and attractive to international participants.

The full statement, including the list of signatory associations, is available here.