On the 21st of March, the European Commission launched a public consultation on the Operations of the European Supervisory Authorities. Commissioner Dombrovskis declared that the Brexit has made the need to reform these authorities more urgent.
Fears of forum shopping…
The main concern is that following Brexit firms which are intending to leave London will relocate to countries with “light touch supervision” (Ireland, Luxembourg…). In order to avoid forum shopping, the consultation paper mentions the idea of giving the ESAs more power so they can redouble their focus on supervisory convergence.
“It is necessary to examine which changes to ESAs' existing powers and governance system are needed to increase the effectiveness of supervision (giving due consideration to the principle on the delegation of powers) and to design a funding system which would enable the ESAs to deliver fully on their mandates.”
Among others, the consultation paper suggests giving more power to ESMA to supervise clearing houses and to have more oversight over cross-border investment funds.
Who will have the custody of the European Banking Authority…?
There is also the question of which country will host the EBA after Brexit?
Several countries are competing to host the authority and the consultation paper suggests that the question of the EBA relocation might present an opportunity to change the supervisory system.
Access the Public Consultation on the operations of the European Supervisory Authorities here
Read the Financial Times article here