The European Securities and Markets Authority (ESMA) is an independent European Union Authority located in Paris. ESMA replaced the

Committee of European Securities Regulators The Committee of European Securities Regulators (CESR) was an independent committee of European Securities regulators in the Lamfalussy process established by the European Commission on June 6, 2001. The role of this committee was to * Improve th ...

(CESR) on 1 January 2011. It is one of the three new European Supervisory Authorities set up within the

European System of Financial Supervisors The European System of Financial Supervision (ESFS) is the framework for financial supervision in the European Union that has been in operation since 2011. The system consists of the ''European Supervisory Authorities'' (ESAs), the European Syst ...

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Overview

ESMA works in the field of securities legislation and regulation to improve the functioning of

financial market A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets ...

s in Europe, strengthening investor protection and co-operation between national competent authorities. The idea behind ESMA is to establish an "EU-wide financial markets watchdog". One of its main tasks is to regulate

credit rating agencies A credit rating agency (CRA, also called a ratings service) is a company that assigns credit ratings, which rate a debtor's ability to pay back debt by making timely principal and interest payments and the likelihood of default. An agency may ra ...

. In 2010 credit rating agencies were criticized for the lack of transparency in their assessments and for a possible

conflict of interest A conflict of interest (COI) is a situation in which a person or organization is involved in multiple interests, financial or otherwise, and serving one interest could involve working against another. Typically, this relates to situations i ...

. At the same time, the impact of the assigned ratings became significant for companies and banks but also states. In October 2017, ESMA organised its first conference which was held in Paris. The event examined issues critical to European financial markets and was attended by 350 participants.

ESMA's Product Intervention Measures

On 1 August 2018, the ESMA implemented modified trading restrictions concerning contracts for difference (CFDs) and

spread betting Spread betting is any of various types of wagering on the outcome (game theory), outcome of an event where the pay-off is based on the accuracy of the wager, rather than a simple "win or lose" outcome, such as fixed-odds betting, fixed-odds (or mon ...

for retail clients. The most significant change was that

binary option A binary option is a financial exotic option in which the payoff is either some fixed monetary amount or nothing at all.Breeden, D. T., & Litzenberger, R. H. (1978). "Prices of state-contingent claims implicit in option prices". ''Journal of Busin ...

s will be completely banned while the CFD leverage that retail clients can trade with will be restricted to 30:1 and 2:1, depending on the volatility of the underlying asset traded. These restrictions applied to traders categorized as retail investors only. Experienced traders, which fall under the category of professional clients, were excluded. This also meant that professional clients did not receive the same investor protections as retail investors. The restrictions, initially imposed as a temporary measure, were renewed on 1 February 2019 for a further three-month period. On 31 July 2019, the ESMA announced that it will not renew the restrictions after they expire on 1 August 2019, as all the EU member countries have managed to implement similar restrictions on national level.

Questions and Answers (Q&A)

To ensure the consistent day-to-day application of Union law within ESMA's remit, one of the organisations' key contributions is the production and maintenance of Q&As. To open the process, ESMA launched in February 2017 a new process allowing stakeholders to submit a Q&A. Once scrutinised, if these Q&As are selected, they are published in English on ESMA's website.

Leadership

Chair: * Verena Ross (since 1 November 2021) * Anneli Tuominen (interim chair, 2021) * Steven Maijoor (1 April 2011 - 31 March 2021) Vice-Chair: * Vojtěch Belling (since 21 November 2022) * Erik Thedéen (December 2021 - November 2022) * Anneli Tuominen (2016 - 2022) Executive Director: * Natasha Cazenave (1 June 2021) * Verena Ross (2011-2021)

Notes

External links

European Securities And Markets Authority
(official website)
Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority)

Larosière report
{{DEFAULTSORT:European Securities And Markets Authority 2011 in the European Union Agencies of the European Union Capital markets of Europe European Union financial market policy Financial regulatory authorities Government agencies established in 2011 Organizations based in Paris 2011 establishments in France Securities and exchange commissions Regulation in the European Union sv:Europeiska systemet för finansiell tillsyn#Europeiska värdepappers- och marknadsmyndigheten