The Dutch Authority for the Financial Markets (AFM) and the French Autorité des Marchés Financiers (AMF) have voiced their support for the European Commission’s proposals to improve centralised market supervision at EU level, while outlining five ‘key enablers’ for their success.

The commission has proposed strengthening market supervisory convergence and integration through the Market Integration and Supervision Package (MISP), as it seeks to strengthen European capital markets.

Its package of reforms looks to increase the role and responsibilities of the European Securities and Markets Authority (ESMA).

The AFM and AMF said the debate was no longer whether supervision should be centralised in certain areas, but how that centralisation could be implemented in a successful and cost-effective manner.

“Centralised supervision seeks to deliver consistent outcomes across the EU, to remove duplicative compliance burdens for cross-border firms, and to allow supervisory resources to be deployed where they have the greatest impact,” the organisations stated.

They therefore argued that effective supervision should be risk-based, adaptive and proportionate, and supervisors must be able to respond to innovation, emerging risks, and new business models.

Furthermore, the organisations said that effective supervisory governance should rely on a robust framework for cooperation and coordination between ESMA and national competent authorities, with ESMA acting as the decision maker.

To support the successful implementation of a centralised supervision, the AFM and AMF outlined five key enablers, which included risk-based and adaptive supervision, and proportionate and transparent funding.

They also called for independent, transparent and accountable guidance, data centralisation, and effective enforcement.

The organisations said that, together, these enablers would help ensure that centralisation delivered its intended benefits and strengthened European capital markets, while maintaining the trust of market participants and the public.

“The MISP is a unique opportunity to strengthen European capital markets and enhance supervisory effectiveness across the EU,” commented VFM executive board chair, Laura van Geest, and AMF chair, Marie-Anne Barbat-Layani.

“By ensuring that the right conditions are in place, we can build a centralised supervisory framework that is nimble and capable of meeting the needs of increasingly integrated European markets.”

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