A substantial change in the way European capital markets are supervised is what Euronext is trying to put on the table, calling for the integration of Europe’s stock exchange markets to be accompanied by a corresponding integration of their supervision.
The core position of the pan-European stock exchange group is that markets and trading, clearing and settlement infrastructures are increasingly operating beyond national borders, while supervision continues to be exercised to a large extent separately by the competent authorities of each country.
This model, according to Euronext, creates overlaps in responsibilities, different supervisory practices and additional costs. For this reason, it proposes that significant and cross-border infrastructures come under substantive supervision at the European Union level, with a central role for ESMA, the European Securities and Markets Authority.
Euronext even goes one step further, requesting that ESMA be the sole competent supervisory authority for the entities that will be included in the new pan-European framework, so as to avoid parallel procedures, different decisions and multiple levels of supervision.
Euronext’s position
In essence, Euronext’s position is that national authorities can retain a substantial role in matters that remain purely national in nature, but for major cross-border infrastructures there should be a clear European supervisory architecture with ESMA at the center.
Sources at the Exchange explained to Euro2day.gr that the rationale behind the intervention is precisely this mismatch between a market that is becoming increasingly pan-European and supervision that remains to a significant degree national.
In an environment in which stock exchange groups and critical infrastructures now operate simultaneously in many countries, what Euronext is seeking is the establishment of a clear European supervisory architecture.
“We remain the eye of the market”
This approach, however, does not mean that the role of national supervisory authorities is considered secondary by all sides.
Sources at the Hellenic Capital Market Commission noted to Euro2day.gr that the effort to unify supervision in an environment with many different countries, markets and institutional particularities is extremely complex. Precisely for this reason, as they emphasized, the role of the national Capital Market Commissions remains critical.
“We remain the eye of the market,” they said characteristically, highlighting the importance of direct knowledge of local conditions, businesses and the day-to-day functioning of each national market.
This position also highlights the key point of the discussion opening at the European level. The question is not only whether more central supervision is needed, but also how this can be combined with the experience and direct view possessed by the national supervisory authorities.
The next steps
The discussion is also of obvious interest for the Greek market, given Athens’ presence now in Euronext’s network of markets. This does not mean that the role of the Greek Hellenic Capital Market Commission is changing today. However, if the European model proposed by Euronext is adopted, it will be redefined at the European level which issues will be supervised centrally by ESMA and which will remain under the jurisdiction of the national authorities.
The proposal is part of the broader Market Integration and Supervision Package and the EU’s goal of a deeper Savings and Investments Union. Euronext argues that without common supervision the integration of European capital markets will remain incomplete and calls for the new system to have clear responsibilities, without multiple levels of decisions and supervisory overlaps.
In any case, this is at the moment a proposal and not a final decision. The next step is the political and institutional discussion at the European level, with Euronext seeking to place at the center the question of whether a single European capital market can continue to operate with fragmented national supervision.