EU countries back sweeping powers for ESMA in financial markets overhaul

EU finance ministers have agreed to grant the European Securities and Markets Authority (ESMA) sweeping new powers to directly oversee major financial market operators, in a move designed to harmonize supervision and advance the bloc’s capital markets integration.

The agreement, reached in Luxembourg on Friday, will see ESMA take on direct supervision of key trading venues, clearing houses, securities settlement bodies and crypto-asset service providers under the Market Integration and Supervision Package (MISP). The reform aims to lower costs, ease cross-border investments, and provide businesses with improved access to funding, according to the deal’s summary.

The new framework will replace fragmented national oversight of major market operators with a centralized approach, supported by a new full-time, independent executive board at ESMA. Dutch Finance Minister Eelco Heinen welcomed the decision, emphasizing that the package delivers "ten months of progress in capital markets integration that previously would have taken a decade."

However, the deal leaves room for fragmentation. Some trading venues operated by Deutsche Börse will remain under German supervision, after Germany secured a key exemption. This carve-out has raised concerns among some officials about the risk of uneven oversight and market fragmentation if other countries seek similar exceptions.

The enhanced role for ESMA is intended to create a more integrated capital market, making it easier for savings and investments to flow across borders. Policymakers argue this will benefit both companies seeking funding and households looking for more diverse opportunities to grow their savings.

Risks remain over the effectiveness of the new supervisory structure if major venues remain outside ESMA’s remit. Financial market participants and regulators will watch closely to see whether the harmonization objectives can be achieved without a fully unified oversight regime, particularly as the EU pursues deeper integration through the Capital Markets Union and Savings and Investments Union initiatives.

The agreement marks a significant step for Europe’s financial regulatory landscape, but the final impact will depend on how ESMA exercises its new powers and whether member states maintain the political will to ensure consistent supervision across the EU.