The EMSA, which stands for European Securities and Markets Authority, was founded and established from the direct result associated with recommendations of the de Larosière report in 2009 that called for establishing the ESFS (European System of Financial Supervision) as the decentralized network. It commenced operations on the 1 January 2011 and went onto replace the CESR (Committee of European Securities Regulators) which was once the network of the EU authorities that promoted supervision that was consistent all over the EU along with advice offered to the EC (European Commission).
The Activities Of The ESMA.
The ESMA achieves its objectives and mission through 4 activities that include the following:
- Promoting supervisory convergence.
- Assessing the risks to markets, investors along with financial stability.
- Directly supervising specified financial entities.
- The completion of one rulebook for the EU financial markets.
The purposes around assessing the risks to markets, investors along with financial stability is in place to detect emerging trends, vulnerabilities and risks and whenever possible any opportunities in a timely manner so they can be enacted upon. The ESMA uses their unique position in order to identify the market developments which threaten investor protection, financial stability or orderly functioning associated with the financial markets.
The completion of a single-rulebook for the EU financial markets has been implemented to promote the EU Single Market in the way of creating a playing field that is level for issuers and investors across the EU. The ESMA has contributed towards improving the overall quality of this rulebook for financial markets in the EU in the way of developing Technical Standards along with offering advice to legislative projects and EU Institutions.
The promotion of supervisory convergence has been implemented to ensure a playing field that is level that is of a high quality for supervision and regulation without a regulatory arbitrage. This consistent application and implementation of these rules is what ensure safety of the different financial systems, ensures markets that are orderly and protects investors.
The ESMA is a direct supervisor for financial entities such as the TRs (Trade Repositories) and the CRAs (Credit Rating Agencies) which form a vital part of the market infrastructure in the EU.
These 4 activities of the ESMA are all closely linked. The ESMA considers the supervisory convergence as the primary outcome of application and implementation of its single rulebook. Direct supervision of the TRS and CRAs feeds into as well as benefits from the ESMAs risk assessment and the activities set out in the single rulebook.