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Unleashing the European Securities and Markets Authority: Governance and Accountability After the ECJ Decision on the Short Selling Regulation (Case C-270/12)

  • Carmine Di Noia and Matteo Gargantini

Abstract

The creation of the European Securities and Markets Authority (ESMA) has marked a major step towards more integrated rulemaking and supervision in the European financial market sector. ESMA's organisation and operations are strongly influenced by the position of this new Authority within the EU institutional framework. The European Court of Justice (in Case C-270/12) confirmed the legitimacy of the legal basis of ESMA itself and of its powers. While ESMA's governance still displays some features of a network among national supervisors, its quasi-regulatory functions and supervisory tasks are constrained by limitations directly or indirectly dictated by the Treaties. This paper highlights how the traditional concepts of independence and accountability towards EU institutions and stakeholders apply to ESMA. ESMA's relationships with national competent authorities, which retain direct supervisory powers with limited exceptions, and the EU institutions, which are competent for the adoption of legislative and non-legislative regulatory measures, are also considered. The analysis shows that tasks conferred on ESMA fall short to match its relatively high accountability, which is aligned with international best practices. The European Commission announced a possible revision of the European Supervisory Authorities (including ESMA) framework for 2014; we therefore suggest some reform proposals that could help streamline regulatory and supervisory functions at EU level, thus allowing ESMA to better exploit its potential while avoiding the risk of excessive centralisation of supervisory powers.

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* Carmine Di Noia: Deputy Director General, Assonime; Luiss-Guido Carli University (Rome); ESMA Securities and Markets Stakeholder Group. Email: . Matteo Gargantini: Senior Research Fellow, Max Planck Institute Luxembourg. Email: . The opinions of the authors are personal and do not necessarily coincide with those of their respective organisations or those of the ESMA Securities and Markets Stakeholder Group, whose working group on the ESAs review was chaired by Carmine Di Noia The authors wish to thank Sadie Blanchard, Georgios Dimitropoulos, Antonio Esposito and Niamh Moloney for helpful comments. All errors and omissions remain the authors' responsibility. Although the essay is the result of common reflections, sections 1, 2 and 4.1 were written by Carmine Di Noia and sections 3, 4.2 to 4.2.2.2 and 5 by Matteo Gargantini.

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Unleashing the European Securities and Markets Authority: Governance and Accountability After the ECJ Decision on the Short Selling Regulation (Case C-270/12)

  • Carmine Di Noia and Matteo Gargantini

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