Capital Markets Union: Commission proposals to reform European financial supervision regime


European Commission published proposals to reform the EU’s supervisory structure, including to extend ESMA’s role and powers in respect of prospectuses and market abuse on 20 September 2017. This represents the first concrete step towards the creation of a single European capital markets supervisor.

It is proposed (amongst other things) that the Prospectus Regulation be amended so as to task ESMA, rather than national competent authorities, with approving:

  • Prospectuses for certain wholesale non-equity securities.
  • Prospectuses relating to asset-backed securities.
  • Prospectuses that are drawn up by property companies, mineral companies, scientific research-based companies or shipping companies.
  • Prospectuses drawn up by non-EU country issuers.

Where it is responsible for approving a prospectus, ESMA would also control related advertisements.

This proposal is intended to create a level playing field for issuers, to speed up approvals, to enhance supervision in the EU and to prevent forum-shopping.

ESMA  would also be given a greater role in coordinating market abuse investigations. This could extend to recommending that competent authorities initiate investigations and to facilitating the exchange of information relevant for those investigations, where ESMA has reasonable grounds to suspect that activity with significant cross-border effects is taking place that threatens the orderly functioning and integrity of financial markets or financial stability in the EU. ESMA would maintain a data storage facility to collect from, and disseminate between, competent authorities, all relevant information.  

The Commission invites the European Parliament and the Council to discuss and agree its proposals as a high priority, in order to ensure their entry into force before the end of the current legislative term in 2019.