EU Plans for Financial “Super-Regulator” Face Leadership Trust Issues

The creation of a “financial super-police force” in the EU has run into mistrust of its leadership

Brussels’ plans to transform the European financial markets regulator (ESMA—European Securities and Markets Authority) into a “financial super-police force” have run into an unexpected problem—a survey of the regulator’s staff revealed that only 34% of its employees consider management’s decisions to be objective and transparent.

Politico reports that a confidential internal investigation is raising questions about the leadership of the European Securities and Markets Authority (SEIMA) at a time when EU lawmakers are rushing to agree on a package of legislative measures by the end of the year designed to transform the bloc into a major investment hub and grant the regulator additional powers.

According to the publication, less than half of ESMA respondents said that senior management sets a good example. Only a third believe that management’s actions are objective and transparent—this figure was flagged in the survey as a “red flag,” the second-lowest of five possible ratings in the feedback assessment system.

The situation is exacerbated by the fact that ESMA has just reached the stage of appointing a new head of the organization. A meeting between the candidate for ESMA head, Italian Carlo Comporti, and members of the European Parliament is scheduled for September 2. He currently serves as a commissioner of the Italian market regulator CONSOB and is a member of the ESMA Executive Board.

ESMA is preparing to assume greater authority

The modernization of ESMA is a central element of the EU’s legislative agenda, known as the Market Integration and Supervision Package. It calls for the creation of a single supervisory authority responsible for overseeing some of the bloc’s most important companies, which form the backbone of the financial markets.

However, the transfer of national powers to a single body has met with resistance, particularly in Dublin and Luxembourg, where most of Europe’s asset managers are based.

ESMA already plays a significant role in regulating the European financial market, and its functions are expanding. The organization is responsible, in particular, for supervision and coordination in the securities markets, investor protection, and financial stability.

Therefore, internal governance issues are significant not only for the organization itself. The more authority is transferred to the European level, the higher the requirements for transparency in decision-making, the independence of the regulator, and the leadership’s ability to maintain trust within the institution.