ESMA Pushes for Greater Oversight Amid Resistance from EU Member States
The European Securities and Markets Authority (ESMA) is taking decisive steps to expand its regulatory powers across the European Union, signaling a major shift toward centralized financial oversight. As the bloc continues to implement the Markets in Crypto-Assets (MiCA) framework and broader capital markets reforms, ESMA’s bid for greater control could reshape how financial supervision operates in the EU.
Greater integration under ESMA supervision
According to a recent report by the Financial Times, ESMA aims to extend its supervisory mandate to directly overview stock platforms, cryptocurrency trading platforms, and clearing houses. The agency also plans to add new responsibilities for Consolidated Tape Providers and ESG rating agencies as part of its 2026 Work Programme. ESMA argues that a more integrated supervisory system would improve financial stability, reduce regulatory fragmentation, and build investor confidence across the European single market.
In recent months, ESMA has conducted joint supervisory actions with national regulators, uncovering inconsistencies in pre-trade controls and compliance practices among financial institutions. The agency plans to issue new guidance to harmonize these measures, ensuring fair and transparent trading across the EU. Additionally, ESMA’s peer reviews of Central Counterparty (CCP) supervision revealed the need for more consistency in risk management and governance frameworks. These efforts align with ESMA’s broader goal of promoting cross-border convergence and preventing regulatory loopholes.
Resistance from national regulators
Despite its ambitions, ESMA’s push for greater control has met resistance from several EU member states. Malta’s Financial Services Authority (MFSA) has openly opposed the initiative, warning that centralizing supervision in Paris could lead to bureaucratic inefficiency and hinder responsiveness to local market conditions. Other smaller jurisdictions share similar concerns, arguing that ESMA’s expansion risks undermining the principle of subsidiarity—the idea that decisions should be taken as closely as possible to the citizens affected.
Reuters reports that ESMA Chair Verena Ross has acknowledged the lack of consensus among member states on expanding ESMA’s powers, particularly concerning the direct supervision of cryptocurrency service providers. Some regulators fear losing autonomy over their domestic markets, while others argue that centralized oversight is necessary to prevent regulatory arbitrage—where firms exploit lenient national rules to gain competitive advantage.
ESMA’s expanded authority would represent one of the most significant reforms to the EU’s financial governance structure in a decade. Supporters believe it would enhance transparency, harmonize market rules, and strengthen the EU’s position as a unified financial bloc. Critics, however, warn that over-centralization could stifle innovation and delay decision-making in rapidly evolving markets like crypto.
As the European Parliament and Council debate future legislation, the outcome of ESMA’s expansion drive could redefine how Europe balances sovereignty and integration. Whether the agency gains the power it viewks will depend on its ability to convince member states that stronger centralized oversight is essential to the EU’s financial resilience and credibility on the global stage.
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