Third-country managers doing business in the EU will be overseen by the bloc’s regulator, not national supervisory agents as is currently the case, under proposals put forward by European lawmakers.
A measure to centralize third-country supervision has been included by the European Commission in its draft of the second European Market Infrastructure Regulation, which aims to ensure the stability of the bloc’s financial markets.
Private fund managers from non-EU countries that wish to establish or market a fund in an EU state currently need to apply for a license from the local regulator. But because the Alternative Investment Fund Managers Directive is interpreted differently from country to country, there is inconsistency in the process.
“ESMA can play a strong, central role in the future as a single access point for third country entities and ensure consistent supervision of those entities across the EU,” Steven Maijoor, chairman of ESMA, said in response to the proposals.
In separate proposals, the Commission recommended ESMA be given new powers to oversee the financial system, a move it considers to be one of the first steps in completing the Capital Markets Union – a truly single, integrated European financial market – by 2019.
Currently, ESMA’s role is to develop Europe-wide rules, such as the AIFMD, to foster supervisory convergence among national regulators, and to enhance consumer and investor protection.
Under the proposals it would be given supervisory powers over investor prospectuses that have a “cross-border dimension and potential risks of supervisory arbitrage,” and those issued by non-EU managers.
“The reform will streamline the process especially for approving prospectuses to be distributed across borders by establishing a single point of entry to European markets, reducing the administrative burden for market operators,” the Commission said.
ESMA will also directly supervise European Venture Capital Funds in a bid to reduce transactional and operational costs for the benefit of investors. There are other areas that it will supervise, but they will not impact private fund managers.