Brussels,

European system of financial supervision​

The EU has introduced a specific supervisory architecture, consisting of 3 European supervisory authorities and a board to monitor systemic risks.

The European system of financial supervision (ESFS) was introduced in 2010. It consists of:
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Founding legislationBoth the ESRB and the 3 ESAs started their operation in January 2011, following the adoption of a package of legislative acts.

These comprise:

In 2011 the EU adopted a further Omnibus II directive to clarify the powers of the new authorities, particularly in the insurance sector.
The adoption of these laws followed the proposals of a Commission communication on financial supervision and the recommendations of the de Larosière expert group. This group was mandated by the Commission to give advice on how to strengthen European supervisory arrangements in light of the failures of financial supervision exposed by the financial crisis. The de Larosière group issued its report in February 2009.

Review of the European system of financial supervision​

The regulations establishing the ESRB and the ESAs include provisions that require the Commission to publish a comprehensive report on the functioning of the new authorities and the ESFS as a whole. Additionally, there is a mandate for a review of the mission and organizational structure of the ESRB. These  reports were issued by the Commission in August 2014.

Building upon the insights provided in these reports and considering the outcomes of the public  public consultation launched in 2013, 2016, and 2017, the Commission unveiled a package of proposals in September 2017 aimed at enhancing the ESFS. These proposals seek to enhance the mandates, governance, and funding of the three ESAs and improve the operations of the ESRB. The objective is to establish more robust and integrated financial supervision throughout the EU.

On September 12, 2018, coinciding with President Juncker's state of the Union address, the Commission released a  Communication on strengthening the Union framework for prudential and anti-money laundering supervision. This Communication introduces a proposal for a regulation that amends various regulations and directives with the aim of consolidating anti-money laundering powers related to the financial sector under the European Banking Authority (EBA). The proposal also seeks to bolster the EBA's mandate to ensure effective and consistent oversight of money-laundering risks and to promote cooperation and information sharing among relevant authorities.

On March 21, 2019, the European Parliament and Member States reached an agreement on key reforms to the European supervision in the EU financial markets domain. This agreement, a pivotal step toward achieving a fully operational capital markets union, reinforces the role and authority of the European Supervisory Agencies, including the European Banking Authority, with an emphasis on anti-money laundering. More details on this agreement can be found in the press release of March 21, 2019, and an updated factsheet from April 1, 2019.

On April 18, 2019, the European Parliament endorsed legislation that lays the foundation for a capital markets union, including the ESFS review.
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On December 18, 2019, the European Parliament and the Council signed  Regulation (EU) 2019/2175, which encompasses the review of the powers, governance, and funding of the ESAs. On the same day, co-legislators also signed  Directive (EU) 2019/2177, which amends several directives, including  Solvency II Directive, MiFID II Directive, and the  4th Anti-Money Laundering Directive, granting enhanced powers to EIOPA, EBA, and ESMA.

As part of the ESFS review, Regulation (EU) 2019/2176, dated December 18, 2019, amended the Regulation that establishes the European Systemic Risk Board.

On March 12, 2021, the Commission initiated a targeted consultation regarding supervisory convergence and the single rulebook. The consultation aimed to assess the framework for supervising European capital markets, banks, insurers, and pension funds. The deadline for responses to the consultation was May 21, 2021.

On May 23, 2022, the Commission published its report on the operations of the European Supervisory Authorities. This report takes into account the results of the public consultation launched in 2021 and assesses the tasks and activities of the ESAs. It also follows up on the Commission's commitment outlined in the 2020 capital markets union action plan to monitor progress toward supervisory convergence.​

Analysis of financial markets

Financial sector analysis

The Commission regularly monitors the functioning of financial markets in the EU.

The Commission regularly monitors developments in the financial sector in the EU, and has been publishing annual reviews of its monitoring of financial market integration in Europe.

As a response to the recent financial crisis, the Commission created the annual European Financial Stability and Integration Report (EFSIR) in 2010, which has an additional focus on the stability of financial markets.

Until 2009, the Commission published the European Financial Integration Report (EFIR)
In October 2017, the Commission services published a special report outlining the policy actions taken by EU countries in the financial sector between 2008 and 2015 in response to the global financial crisis.

Insurance and pensions authorities and organisations

Consult the list of the national and international authorities and other bodies dealing with insurance and pensions

EU Strategy on Supervisory data collection

Effective supervision of the EU financial system is contingent upon the availability of timely, relevant, and high-quality data.

Over the past decade, the financial landscape has witnessed a significant increase in the volume and intricacy of data necessary for comprehensive oversight. Simultaneously, there has been a swift advancement in digital technologies, enabling the collection and analysis of this expanding dataset.

​To ensure the continued effectiveness of EU supervisory reporting rules and data practices, it is imperative that they adapt and evolve in tandem with these developments.
The current EU approach to defining requirements and collecting data is complex and inefficient, leading to redundancies and inconsistencies and for reason the European Commission did a fitness check of the EU approach.

​It was detected that companies often report similar data to multiple authorities, with additional national reporting and ad hoc data requests further complicating matters. Additionally, EU supervisory reporting rules lag behind technological advancements, making them unsuitable for modern IT tools. These challenges result in high costs for companies and lower data quality.

The fitness check identified five key areas for improvement:

  1. legislative processes,
  2. governance,
  3. data needs and uses,
  4. data consistency,
  5. technology

To address these issues and facilitate data-driven supervision, the Commission adopted the Strategy on supervisory data in EU financial services on December 15, 2021.

​The Strategy aims to modernize EU supervisory reporting by ensuring accurate, consistent, and timely data to supervisory authorities at EU and national levels while reducing the overall reporting burden. It aligns with the European data strategy and digital finance strategy and fulfills the Commission's commitments to simplify and reduce burdens. Additionally, it supports supervisory convergence and the capital markets union objectives.

The Commission's vision for supervisory data in EU financial services focuses on:

1. Enhancing data consistency and standardization.
2. Facilitating improved data sharing among authorities.
3. Enhancing the process for developing and adopting reporting requirements.
4. Implementing joint governance to leverage modern technologies effectively

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Implementation

The EU's strategy for modernizing supervisory reporting is being implemented gradually and collaboratively with various stakeholders, including EU and national authorities and industry players. Here are some key milestones and progress updates related to the strategy's implementation:

1. February 16, 2023: Workshop on data sharing between authorities in EU financial services held by the Commission Directorate General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA).

2. October 18, 2022: Workshop on unlocking the potential of machine readable and executable reporting. organized by DG FISMA and the European Securities and Markets Authority (ESMA).

3. July 28, 2022: Publication of the  final report on machine readable and executable reporting (MRER) proof of concept: Assessing the feasibility of machine readable and executable reporting for EMIR..

4. June 13, 2022: Call for feedback launched by the Commission to identify legal and technical obstacles to sharing supervisory, statistical, and resolution data among EU and national authorities (End date: September 23, 2022).

5. November 12, 2021: Publication of the final report on implementing dictionaries of regulatory concepts and reporting obligations by assisted machine learning.

6. December 15, 2021: Adoption of the strategy on supervisory data in EU financial services by the Commission.

7. January 19, 2021: Targeted consultation launched by the Commission on the establishment of a European single access point (ESAP) for financial and non-financial information publicly disclosed by companies.

8. September 24, 2020: Adoption of a digital finance package to support innovative financial products, and to set rules on crypto-assets and digital resilience..

9. February 19, 2020: Adoption of the European data strategy by the Commission. Afterwards, the Commission proposed the With the European data act ​

10. November 10, 2020: Workshop on a strategy for supervisory data in EU financial services.

11. December 1, 2017: Launch of a public consultation by the Commission on the fitness check of supervisory reporting.

These milestones reflect the ongoing efforts to modernize supervisory reporting in EU financial services, ensuring timely and high-quality data for supervisory authorities while reducing reporting burdens.