Shearman & Sterling has released a new report on changes proposed by the Commission with regards to strengthening the powers of European Supervisory Agencies like ESMA, the EBA, and EIOPA.
Some of the more interesting tidbits:
ESAs will be required to assist the European Commission in preparing its equivalence decisions on whether a third country has an equivalent framework for supervising the relevant financial market participant. The ESAs will also be responsible for on-going monitoring of developments in third countries and, in that context, submitting an annual confidential report to the European Commission.
However, the power of the ESAs to develop guidelines and recommendations will be safeguarded by two different tools. The first will require a cost-benefit analysis to be undertaken each time an ESA develops guidelines or recommendations. The second tool will allow the relevant ESA stakeholder groups to consider whether the ESA is exceeding its competency in issuing guidelines or recommendations and to issue an opinion to the European Commission for it to consider the case.
Also, the funding mechanism will be set to evolve as well:
The Commission proposes that the private sector should take a greater role in financing the ESAs. The supervisory work of the ESAs is currently financed by the EU budget and national regulators’ budgets. Only entities under the direct supervision of ESMA (i.e. trade repositories and credit rating agencies) have made direct financial contributions to date. Under the proposals, financial institutions indirectly supervised by the ESAs will make annual contributions, proportionate to their size.
The full report can be found here.