Asset Management & Investment Funds: EU & International Developments - June 2018

ESMA supervisory convergence work in a Brexit context

Verena Ross, Executive Director of the European Securities and Markets Authority (ESMA), delivered a speech on the role of regulation and supervision in developing a genuine European single financial market. Points of interest include:

  • Supervisory convergence will remain a priority over the coming years. ESMA is primarily concerned with financial markets, but also seeks to ensure convergent supervisory approaches across sectors. As the focus shifts from regulatory to supervisory tasks, cross-sectoral consistency will develop across the banking, insurance and pensions, and securities sectors.
  • The need for supervisory convergence is enhanced because of Brexit.
  • ESMA's supervisory co-ordination network (SCN), which is chaired by Ms Ross, is a successful tool in bringing together experts from a wide range of competent authorities who table cases they face involving UK entities seeking to move to the remaining EU member states (EU27). The SCN has, so far, focused on different themes arising from authorisation requests, or requests for extension of existing authorisations of firms seeking to relocate from the UK, in particular regarding outsourcing or delegation arrangements. The focus has been on investment firms and fund managers, but the SCN has also considered trading venues.
  • In the context of Brexit, it is essential that the proposed EMIR Refit Regulation with its annex is implemented before March 2019.
  • Guidelines and Q&As are supervisory convergence tools used by ESMA when national regulators and industry stakeholders seek additional guidance. ESMA consults extensively on draft guidelines. Q&As are reserved for more technical issues and are better suited for providing faster responses. ESMA does not believe that it is necessary to change the governance principles around these tools, but it is exploring ways to improve its interaction with stakeholders in this and other areas
  • It is important to find the right match between a convergence issue and the relevant convergence tool chosen to address it. This is an area where ESMA can further improve.
  • ESMA is committed to enlarging the scope of its data management and data analysis, to support its activities.

ESMA and closet indexing

ESMA held a supervisors’ workshop for National Competent Authorities on 27 June to promote supervisory convergence in the supervision of closet indexing. Closet indexing is a practice whereby asset managers claim to manage their funds in an active manner whilst in fact staying very close to a benchmark and charging management fees in line with actively managed funds. The workshop follows ESMA’s earlier work on potential closet index tracking.

ESMA Annual Report

  • ESMA issued its Annual Report which includes information on:
  • ESMA's mission and objectives
  • ESMA's achievements against its 2017 objectives
  • Promoting supervisory convergence
  • Assessing risks to investors, markets and financial stability
  • Completing a single rulebook for EU financial markets
  • Direct supervision of specific financial entities
  • Joint Committee

The Annual Report also sets out ESMA's Boards and Standing Committees and its 2017 organisational chart as at 31 December 2017.

​​Anti-Money Laundering/Combating the Financing of Terror/Corruption


The text of the fifth Anti-Money Laundering Directive has been published in the Official Journal of the EU. 5AMLD will amend the fourth Anti-Money Laundering Directive. It  must be transposed by member states into national law by 10 January 2020. Click here for more details.

For more information please contact a member of the Asset Management & Investment Funds Team.

Date publised: 29 June 2018