ESMA To Focus On Supervision, Sustainability, Digitalisation And The Capital Markets Union In 2022

The 2022 AWP has been developed at a time of significant change for ESMA with its new powers and responsibilities, growth in staff numbers and senior management changes. The key areas of focus for 2022 include: the exercise of new, and existing, supervisory powers for benchmarks and data service providers (DRSPs) as well as central counterparties (CCPs); its contribution to the European Union (EU) priorities on the development of the Capital Markets Union (CMU), sustainable finance and innovation; and the convergence of supervisory and regulatory practices across the EU. In addition, it will continue to monitor the impact of the United Kingdom’s withdrawal from the EU on the evolution of EU and global capital markets.

Natasha Cazenave, Executive Director, said:

“ESMA faces another year of change and challenge in 2022, with new supervisory powers for benchmarks and data service providers, significant contributions expected to support the EU’s priorities through single rulebook and supervisory convergence work and further enhancements to our role as an EU capital markets data hub.

“This is an ambitious work schedule that aims to respond to the challenges faced by the EU, its capital markets, and its citizens. This includes developing the retail investor base to support the Capital Markets Union, promoting sustainable finance and long-term oriented markets, and dealing with the opportunities and risks posed by digitalisation and innovation in the financial sector.”

Key Workstreams for 2022

ESMA will focus on its objectives of enhancing investor protection and promoting stable and orderly financial markets through the following workstreams:

1. Cross-Cutting Themes – ESMA will focus on contributing to the EU’s priorities including:
   1. Capital Markets Union – Contribute to developments in the regulatory and supervisory framework supporting the development of European capital markets, notably through its work on the European single access point (ESAP), on the retail investment strategy, and EC initiatives to facilitate SMEs access to public markets;
   2. Sustainable finance – develop rules on environmental, social and governance (ESG) disclosures and risk identification methodology for ESG factors, contribute to the work on non-financial reporting, and work with national authorities to prevent the risk of greenwashing; and
   3. Innovation and digitalisation – contribute to the implementation of the Digital Operational Resilience Act (DORA), the Markets in Crypto Assets Regulation (MiCA) and the regulation on a pilot regime for market infrastructures based on distributed ledger technology, further our understanding of the impact of financial innovation on capital markets and foster a co-ordinated approach, and work with NCAs and market participants to counter cyberthreats and other operational risks.
2. Supervisory Convergence – priorities include contributing to a risk-based, consistent and coordinated approach to supervision in the EU, focused on assessing the results of Union Strategic Supervisory Priorities and reviewing its supervisory convergence toolkit.   It will deliver peer reviews on the supervision of investment firms cross-border activities, NCAs’ handling of Brexit related relocations, CSD supervision, prospectus scrutiny and approval procedures, the implementation of STS criteria and the supervision of CCPs’ business continuity under remote working arrangements.
3. Risk Assessment – strengthen its risk identification work and co-operation with NCAs and EU and international public authorities, support stress-testing for risk identification and supervisory responses to financial stability risks. ESMA’s new co-ordination role on mystery shopping should provide insights on advice and distribution of products to retail investors across the EU. ESMA will continue to evaluate the benefits and risks of financial innovation and ESG developments on financial markets and investors.
4. Single Rulebook – priority areas include contributing to the reviews of the Prospectus and Transparency Directives, MiFID II/MiFIR, PRIIPS, the Short Selling Regulation, and CSDR, as well as maintaining a high degree of transparency when developing regulatory provisions. 
5. Direct Supervision – ESMA will continue to prioritise the areas where it has been entrusted with supervisory responsibilities notably for Credit Rating Agencies and Trade Repositories. In 2022, it will additionally focus on the new entities coming under its direct supervision – critical benchmarks, Data Reporting Service Providers and Tier 2 CCPs – and play an important role in the oversight of critical market infrastructures.