EU capital markets integration and supervision reform

European Union finance ministers have reached a political agreement on the Markets Integration and Supervision Package (MISP), a key component of the Savings and Investments Union (SIU) initiative. This reform seeks to mobilize approximately 10 trillion euros in private savings currently held in low-interest bank deposits to fund economic growth and innovation.

A central component involves transferring the supervision of significant cross-border trading systems, central securities depositories, and central counterparties to the European Securities and Markets Authority (ESMA). To lead this transition, Carlo Comporti was appointed as the new president of ESMA, effective November 1. During the IMF annual meeting in Bangkok, Eurogroup President Kyriakos Pierrakakis noted that progress made over the last 10 months exceeds that of the previous decade, while EU Economy Commissioner Valdis Dombrovskis described the agreement as a significant step despite desiring even more ambitious outcomes.

The agreement includes specific regulatory measures, such as a ‘depository passport’ and voluntary status for Pan-European Market Operators (PEMO). While the original proposal suggested ESMA oversee all stock exchanges, the current agreement includes exceptions to reduce fragmentation. Germany secured provisions for certain parts of the Deutsche Börse group focusing on the domestic market, and exceptions were also noted for the Swiss-based SIX Group, which manages the Madrid market and the British platform Aquis.

Implementation involves national legislative adjustments, such as the Croatian Parliament’s scheduled discussion of amendments to its national Capital Market Act to harmonize with European directives.