The European Commission is preparing reforms that would shift supervision of major stock exchanges, cryptocurrency venues, and clearing houses from national watchdogs to the European Securities and Markets Authority (ESMA). This move aims to reduce market fragmentation across the bloc.
The proposal is part of a forthcoming “markets integration package” intended to bolster the EU’s financial competitiveness, according to reporting by the Financial Times.
Under the forthcoming approach, ESMA’s mandate would expand beyond its current coordination and rule-making role to include hands-on supervision of strategically important market infrastructures, including large crypto trading platforms. ESMA would take direct responsibility for entities with significant cross-border activity and act as an arbiter in disputes among national supervisors. Smaller companies, however, would still be subject to domestic regulators.
The Commission’s goal is to streamline oversight that is currently divided among 27 national regimes. This patchwork, some officials and market participants say, raises costs and complicates cross-border activity, investment, and start-ups’ growth potential. The plan is to create a single supervising body akin to the Securities and Exchange Commission (SEC) in the US.
Support for and resistance to the shift remain split among member states, policymakers, and trade groups. Both Christine Lagarde, president of the European Central Bank (ECB), and her predecessor, Mario Draghi, support the move, with the latter having raised the idea in a 2024 report.
France has also backed deeper centralization to complete the EU’s capital markets integration ambitions. However, some countries with sizable local financial hubs—such as Luxembourg and Ireland—have expressed concerns that central oversight could disadvantage their domestic sectors or add onerous supervisory costs, potentially crushing small businesses.
As Luxembourg’s finance minister Gilles Roth put it in the Financial Times: “We would like to have [supervisory] convergence rather than creating a costly and ineffective centralized model.”
Other countries have expressed a more mixed response. Germany, for example, has signaled conditional openness to ESMA oversight of the asset management industry, but not crypto exchanges.
The European Commission is aware of these tensions, stating, “We are considering different models for single supervision…from the perspective of balancing the EU interest with local expertise.”
The Commission is expected to unveil specific proposals in December. It remains to be seen how policymakers will strike the balance between centralization and innovation.
