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Strengths and Weaknesses of the ESMA-SEC Supervisory Cooperation

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Regulating and Supervising European Financial Markets

Abstract

This chapter analyses one important and practical aspect of financial markets supervision: the cooperation between the European Securities and Markets Authority (ESMA) and the US Securities and Exchange Commission (SEC). How do ESMA and SEC cooperate in supervisory matters? What are the major strengths and weaknesses of this cooperation?

Both ESMA and SEC are promoting their international cooperation. The prime example of supervisory cooperation between ESMA and SEC is their Memorandum of Understanding (MoU) of March 2012. Its Annex on Credit Rating Agencies (CRAs) is of particular importance as it addresses a sector where ESMA has direct supervision in the European Union (EU).

Another example of supervisory cooperation between ESMA and SEC concerns the EU Directive on alternative investment fund managers (AIFM), where ESMA is taking a coordinating role. Thus, ESMA drafted a Memorandum of Understanding template and negotiated it with 46 non-EU regulators. With SEC, each of the EU Member States’ authorities concluded the MoU between 2013 and 2014. Thus, we have a MoU formally concluded by SEC and Member States’ regulators, but substantively drafted and negotiated by ESMA centrally.

ESMA might well be considered as promoting its international activities in areas where it enjoys direct supervisory powers (e.g. CRAs) and those where it has a mere coordinating role (e.g. AIFM). This way, ESMA might extend its supervisory reach internationally and “become the EU ‘face’ of financial market supervision” regardless of the internal division of competences between the EU and its Members States.

G. Bianco is Research Fellow at University of Oslo and at Université Paris 1 Panthéon-Sorbonne.

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Notes

  1. 1.

    The High-Level Group on Financial Supervision in the EU (2009), pp. 38–39.

  2. 2.

    Moloney (2014), p. 945.

  3. 3.

    Moloney (2011), p. 181.

  4. 4.

    European Commission (2007).

  5. 5.

    Schammo (2012), p. 773.

  6. 6.

    Moloney (2014), p. 950.

  7. 7.

    Moloney (2014), p. 959.

  8. 8.

    European Commission (2009), pp. 10–11.

  9. 9.

    Moloney (2014), p. 943.

  10. 10.

    Moloney (2014), p. 944.

  11. 11.

    Moloney (2014), p. 973.

  12. 12.

    Moloney (2011), p. 191.

  13. 13.

    Moloney (2014), p. 987.

  14. 14.

    Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, pp. 84–119). It will be henceforth referred to as the “ESMA Regulation”.

  15. 15.

    Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU, OJ L 173, 12.6.2014, pp. 349–496.

  16. 16.

    Regulation (EU) No 600/2014 of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Regulation (EU) No 648/2012, OJ L 173, 12.6.2014, pp. 84–148.

  17. 17.

    Moloney (2011), p. 193.

  18. 18.

    Regulation (EU) No 236/2012 of the European Parliament and the Council of 14 March 2012 on short selling and certain aspects of Credit Default Swaps, OJ L 86, 24.3.2012, pp. 1–24.

  19. 19.

    Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) No 1060/2009 and (EU) No 1095/2010, OJ L 174, 1.7.2011, pp. 1–73.

  20. 20.

    Moloney (2014), p. 982.

  21. 21.

    Moloney (2011), p. 199.

  22. 22.

    Moloney (2011), p. 203.

  23. 23.

    See Deipenbrock (2014b), pp. 214–219.

  24. 24.

    Moloney (2011), p. 203.

  25. 25.

    Regulation (EC) No 1060/2009 of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (OJ L 302, 17.11.2009, p. 1), in particular amended by Regulation (EU) No 513/2011 of the European Parliament and of the Council of 11 May 2011 (OJ L 145, 31.5.2011, p. 30); by Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 (OJ L 174, 1.7.2011, p. 1); by Regulation (EU) No 462/2013 of the European Parliament and of the Council of 21 May 2013 (OJ L 146, 31.5.2013, p. 1); and by Directive 2014/51/EU of the European Parliament and of the Council of 16 April 2014 (OJ L 153, 22.5.2014, p. 1).

  26. 26.

    Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC derivatives, central counterparties and trade repositories (OJ L 201, 27.7.2012, pp. 1–59).

  27. 27.

    ESMA Board of Supervisors (2012a), p. 2.

  28. 28.

    ESMA Board of Supervisors (2012b), p. 3.

  29. 29.

    Bismuth (2011), p. 78.

  30. 30.

    Securities and Exchange Commission (2014).

  31. 31.

    Murphy (2013), p. 24.

  32. 32.

    Securities and Exchange Commission (2014).

  33. 33.

    Murphy (2013), p. 25.

  34. 34.

    Schapiro (2010).

  35. 35.

    Chang (2014), p. 27.

  36. 36.

    Macneil (2014), p. 183.

  37. 37.

    Zukina (2012), p. 269.

  38. 38.

    Chang (2014), p. 29.

  39. 39.

    Securities and Exchange Commission - European Commission (1991).

  40. 40.

    Securities and Exchange Commission - CESR (2006).

  41. 41.

    Conac (2002), p. 481.

  42. 42.

    On the current EU regulation of credit rating agencies, see Deipenbrock (2014a), pp. 5–11.

  43. 43.

    ESMA Board of Supervisors (2013), p. 3.

  44. 44.

    ESMA Board of Supervisors (2013), p. 3.

  45. 45.

    IOSCO (2002).

  46. 46.

    Moloney (2014), p. 992.

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Authors and Affiliations

  1. University of Oslo, Oslo, Norway

    Giuseppe Bianco

  2. Université Paris 1 Panthéon-Sorbonne, Paris, France

    Giuseppe Bianco

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Editors and Affiliations

  1. Faculty of Law, University of Oslo, Oslo, Norway

    Mads Andenas

  2. HTW Berlin University of Applied Sciences, Berlin, Germany

    Gudula Deipenbrock

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Bianco, G. (2016). Strengths and Weaknesses of the ESMA-SEC Supervisory Cooperation. In: Andenas, M., Deipenbrock, G. (eds) Regulating and Supervising European Financial Markets. Springer, Cham. https://doi.org/10.1007/978-3-319-32174-5_7

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  • DOI: https://doi.org/10.1007/978-3-319-32174-5_7

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