Understanding the European Securities and Markets Authority (ESMA)

Published on 27th June 2024

ESMA is the EU’s financial markets regulator and supervisor and is a vital regulatory body in the European Union (EU).  It was established in 2011 and is headquartered in Paris. It plays a crucial role in maintaining the stability and integrity of the EU’s financial system.

ESMA’S MISSION

Its mission is to enhance investor protection, promote orderly financial markets and safeguard financial stability.

HISTORY AND FORMATION

ESMA was formed following the 2009 de Larosière report, which recommended creating a regulatory body to oversee the EU’s financial markets. It succeeded the Committee of European Securities Regulators (CESR), inheriting its responsibilities while expanding its mandate to include additional regulatory functions.

STRATEGIC PRIORITIES

Fostering effective markets and financial stability

  • Fair, orderly and effective markets
  • Contributing to strengthening the stability of the financial system
  • Development of the eu single market
  • The EU’s voice in the global marketplace

Strengthening supervision of EU financial markets

  • Enhanced risk prioritisation and outcome-based supervision
  • Strengthening supervisory convergence across the EU single market is a key ESMA objective

Enhancing protection of retail investors

  • Investor protection
  • Retail investor engagement

THEMATIC DRIVERS

Enabling sustainable finance

  • Effectiveness and integrity of ESG markets
  • A workable regulatory framework
  • Effective and consistent supervision
  • Role of retail investors

Facilitating technological innovation and effective use of data

  • Technological innovation
  • Stepping up the effective use of data across ESMA’s activities

WHO DOES ESMA SUPERVISE?

  • The EUs CRAs (Credit Rating Agencies)
  • TRs (Trade repositories)
  • SRs (Securitisation repositories)
  • Certain DRSPs (Data Reporting Service Providers)
  • Certain benchmark administrators and Tier 2 third-country CCPs (Central Counterparties)

ESMA plays a pivotal role in ensuring the stability and transparency of the EU’s financial markets. Through its regulatory initiatives and strategic priorities, ESMA works to protect investors, foster financial stability, and promote sustainable finance across the European Union.

 

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