ESMA and the evolution of the EU’s supervisory model for financial markets

This chapter considers the evolution of the EU’s institutional governance arrangements for the EU financial system by examining the supervisory role of the European Securities and Markets Authority (ESMA). The optimal institutional location for EU financial market supervision remains one of the most freighted questions in EU financial regulation law and policy, with the recent policy and political focus on the achievement of a Savings and Investment Union re-igniting the longstanding debate on the merits of a single supervisor. This chapter considers how ESMA has evolved as regards direct supervision, and the factors which have shaped its incremental acquisition of supervisory powers and of a considerable related regulatory capacity. It suggests that persisting with this incremental and experimental strengthening of ESMA’s powers offers a more sustainable way forward than a material and punctuated expansion of ESMA’s current supervisory mandate.