The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, welcomed the European Commission’s legislative proposal on market integration and supervision.

It argued that the package represents a major step towards deeper and more efficient EU capital markets and incorporates many of the recommendations ESMA outlined in its 2024 Position Paper.

The proposal directly addresses fragmentation that stems from divergent national rules and supervisory practices across member states.

The regulator noted that by removing barriers in trading, post-trading, and asset management, and by enabling more harmonised supervision, the package will help market participants operate more seamlessly across the Single Market and support scale, efficiency, and better outcomes for investors and businesses.

ESMA also welcomed the strong focus on streamlining regulatory requirements, reducing administrative burden, and facilitating innovation, all of which will enhance the competitiveness and agility of EU capital markets.

A key element of the package is the proposed transfer of direct supervision of certain significant cross-border infrastructures and crypto-asset service providers to the EU level.

The regulator stated, “ESMA stands ready to take on these specific responsibilities, drawing on almost 15 years of growing experience supervising diverse and selective parts of our capital markets.”

“This proposal represents a shift in supervision for a limited subset of our capital markets, in which ESMA would work hand in hand with the National Competent Authorities (NCAs) to develop the capacity and expertise to take on such new responsibilities,” the authority explained.

At the same time, ESMA stressed that for the broader market that remains under national supervision, coordinating supervisory standards and achieving aligned outcomes across the EU remains a key priority.

This would be reinforced, for example, by giving ESMA an enhanced convergence role for large cross-border asset management groups.

Today’s proposal forms a central pillar of the Commission’s Savings and Investments Union (SIU) strategy.

ESMA concluded by saying it looks forward to working with the co-legislators as they advance this important initiative to build deeper and more integrated EU capital markets.