ESMA
ESMAAlso called european Securities and Markets Authority
The European Securities and Markets Authority is the EU agency that safeguards investor protection and the stability of financial markets. Based in Paris, it writes technical standards and guidelines for EU securities law, coordinates national regulators and directly supervises some entities, such as credit rating agencies and trade repositories.
How it works
ESMA drafts regulatory and implementing technical standards under laws such as MiFID II, EMIR and MiCA, which the Commission then adopts. It issues guidelines and Q&As that national authorities apply, and runs peer reviews to test consistent supervision. For a defined set of entities, including credit rating agencies, trade repositories and consolidated tape providers, ESMA is the direct supervisor.
Its board of supervisors is made up of the heads of the national securities regulators of each member state. For investment firms, trading venues and fund managers, ESMA output sets the detail of reporting, conduct and market abuse rules that national regulators enforce. ESMA is one of three European supervisory authorities, with the EBA and EIOPA.
The rules
Established ESMA from 1 January 2011, replacing the Committee of European Securities Regulators, and set its powers and governance.
ESMA and national securities regulators in the EUGives ESMA mandates to draft technical standards on transparency, transaction reporting and the consolidated tape, among other areas.
Investment firms, trading venues and market operatorsCommon questions
What is the difference between ESMA and national regulators?
National regulators authorise and supervise most firms day to day. ESMA writes detailed standards, promotes consistent supervision across the EU and directly supervises a small set of entities such as credit rating agencies.
Can ESMA fine firms?
Yes, for entities it supervises directly. ESMA has fined credit rating agencies and trade repositories. For other firms, fines are imposed by national authorities under national law implementing EU rules.
Does ESMA apply in the UK?
No. Since the end of the Brexit transition period on 31 December 2020, ESMA has no role in UK supervision. UK firms dealing with EU clients or venues may still fall under ESMA rules through EU entities.
