ESMA Annual Report Highlights Focus on Supervision, Risk Monitoring

The European Securities and Markets Authority (ESMA), the EU's financial markets regulator, has released its Annual Report for 2023, detailing key achievements in implementing its new 5-year strategy aimed at enhancing investor protection and promoting stable financial markets across the European Union.

In the report, ESMA Chair Verena Ross emphasized the organization's core focus on protecting retail investors, who play a crucial role in financial markets. Notably, the report revealed a year-over-year decline in the average cost of investing in certain funds, although significant variations persist across member states.

"Retail investors are at the core of our strategy through the key role they play in financial markets," Ross stated. "In 2023, we continued our mission to protect investors, including through a mystery shopping exercise on costs and charges under MiFID and targeted warnings about the risks of crypto assets."

Amid geopolitical tensions and macroeconomic developments impacting European financial markets, ESMA maintained vigilance and proactive measures, coordinating actions and sharing information between national supervisors to ensure a consistent crisis response approach.

ESMA Executive Director Natasha Cazenave highlighted the authority's efforts to strengthen supervision of EU financial markets, reinforcing the framework used to identify supervisory risks in collaboration with national supervisors.

"Consistent with our strategic priority to strengthen supervision of EU financial markets, we continued to reinforce and streamline the framework we use to identify supervisory risks, not just within ESMA but also with national supervisors," Cazenave said.

Significant achievements outlined in the report include:

• Exploring new areas of regulation and preparing for the implementation of the Digital Operational Resilience Act (DORA) and the Markets in Crypto-Assets Regulation (MiCA).
• Enhancing supervisory convergence through peer reviews on the supervision of central counterparties and central securities depositories.
• Monitoring retail investment markets and reporting on costs and performance, recommending investors carefully evaluate expenses and diversify investments.
• Enhancing sustainability disclosures through participation in the development of European Sustainability Reporting Standards.
• Launching a new data strategy for 2023-2028 to leverage technology and data for improved market supervision and investor protection.
• Assessing greenwashing risks and agreeing on a definition with EBA and EIOPA, identifying material risks, and outlining preliminary remediation actions.

The Annual Report underscores ESMA's commitment to navigating the evolving financial landscape, ensuring effective regulation and supervision, and protecting investors across the European Union.

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