On 20 September, the European Commission published a legislative proposal to amend the European System of Financial Supervision with a view to reinforcing integrated supervision to strengthening Capital Markets Union and financial integration.

EFAMA fully supports supervisory convergenceas a crucial element in ensuring a successful Capital Markets Union through supervision, and integral to removing barriers to cross-border provision of financial services. The ESAs should ultimately ensure further capital markets integration and support building an efficient value chain in the interest of end-investors.

This is a complex, wide-ranging proposal, which EFAMA and its members are in the process of analysing. The proposal gives new supervisory and intervention powers to ESMA, including direct supervision on a number of EU regulated funds (ELTIFs, EuSEFs and EuVECAs), and additional powers to ensure coordinated supervisory action in the areas of delegation and outsourcing.

It should however, be acknowledged, that delegation is already a reliable, well-functioning and tested model, central to ensuring investor choice with the ability of EU investors to access world leading investment expertise and the associated improved investor outcomes. Equally important, the EU legislative framework for the asset management industry currently sets robust standards for preventing letter-box entities.

In this context, and in line with the CMUs overall aim to establish stronger saving patterns and develop non-bank funding sources in Europe, we need to ensure that any review of the European supervisory set-up fosters these principles. Ultimately, from an EFAMA point of view, nurturing UCITS global appeal, is of paramount importance.

EFAMA looks forward to constructively engaging with policymakers in Council and Parliament, to maintain investor choice and outcomes and to improve European capital markets within a global framework, as this proposal begins its legislative journey.