ESMA considers financial sustainability and stability issues in 2022 agenda launch

The European Securities and Markets Authority (ESMA) has published its 2022 Annual Work Programme to set out what it intends to work on over the next 12 months.

The 2022 agenda intends to focus on, amongst other things, the exercise of new and existing supervisory powers for benchmarks and data service providers and central counterparties, its contribution to the EU priorities on the development of the Capital Markets Union, sustainable finance and innovation and the convergence of supervisory and regulatory practices across the Union.

ESMA mentioned it will also continue to monitor the impact of the UK’s withdrawal from the EU on the evolution of the EU and global capital markets.

The authority detailed it will focus on its objectives of bolstering investor protection and promoting stable and orderly financial markets through a number of different workstreams.

The first workstream will include contributing to developments in the regulatory and supervisory framework supporting the development of European capital markets, which it intends to do through its work on the European single access point, its retail investment strategy and European Council initiatives to assist SMEs access to public markets.

ESMA also intends to develop rules on ESG disclosures and risk identification methodology for ESG factors, as well as contribute to the work on non-financial reporting and work alongside national authorities to prevent the risk of greenwashing.

There will also be a push for further innovation and digitalisation. The organisation stated it will contribute to the implementation of the Digital Operational Resilience Act, the Markets in Crypto Assets Regulation and the regulation on a pilot regime for market infrastructures based on distributed ledger technology.

This, ESMA claims, will further its understanding of the impact of financial innovation on capital markets, as well as work with national competent authorities (NCAs) and market participants to counter cyberthreats.

Another focus for 2022 will be supervisory convergence – this will include contributing to a risk-based, consistent and coordinated approach to EU supervision, including focusing on assessing the results of Union Strategic Supervisory Priorities and reviewing its supervisory convergence toolkit. The authority will deliver peer reviews of investment firm supervision of cross-border activities and NCAs handling of Brexit-linked relocations amongst other things.

ESMA will look to strengthen its risk identification work and cooperation with NCAs and EU and international authorities as well as support stress-testing for risk identification and supervisory responses to financial stability risks. It will also continue to evaluate the benefits and risks of financial innovation and ESG developments on financial markets and investors.

The organisation will additionally contribute to the reviews of the Prospectus and Transparency Directives, MiFID II/MiFIR and a range of other regulations when developing regulatory provisions. It also claims it intends to prioritise the areas where it has been entrusted with supervisory responsibilities, notably for Credit Rating Agencies and Trade Repositories.

ESMA executive director Natasha Cazenave said, “ESMA faces another year of change and challenge in 2022, with new supervisory powers for benchmarks and data service providers, significant contributions expected to support the EU’s priorities through single rulebook and supervisory convergence work and further enhancements to our role as an EU capital markets data hub.

“This is an ambitious work schedule that aims to respond to the challenges faced by the EU, its capital markets, and its citizens. This includes developing the retail investor base to support the Capital Markets Union, promoting sustainable finance and long-term oriented markets, and dealing with the opportunities and risks posed by digitalisation and innovation in the financial sector.”

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