Speech by Commissioner Albuquerque at the European Securities and Markets Authority (ESMA) conference: A new era for EU capital markets

ESMA Conference: A new era for EU capital markets

Good morning, ladies and gentlemen.

Many thanks to Verena for inviting me to take part in today's discussion. It is a pleasure to be back in Paris. I am encouraged by the topics participation today, which shows there is a clear momentum among stakeholders for creating deeper, more integrated EU capital markets.

But before sharing my thoughts about key aspects for creating a more efficient EU capital market, let me acknowledge and praise ESMA, its staff and management for 15 years of successful activity.

This was not an easy period. It was marked by much instability: the great financial crisis, Brexit, Covid, the Russian invasion of Ukraine, the more recent geopolitical instability, increased digitalisation and the arrival of generative AI, to name a few.

These days we tend to focus much on how to transform ESMA in an evolving world, with an eye to the future. Such discussions build on a strong belief that ESMA can play a bigger role, belief which originates in the confidence and reputation that ESMA has built over the years.

Therefore, on this anniversary moment, apart from looking into the future, it is equally important to recognise the progress done so far, and the substantial work by ESMA to enhance investor protection, promote orderly financial markets and safeguard financial stability.

Let's not forget that ESMA was the first authority to exercise EU level supervision in the financial sector, when it was entrusted in 2011 with the supervision of credit rating agencies.

Since then, ESMA has become the supervisor of trading and securities repositories, data reporting service providers, benchmark administrators, third country CCPs, reviewers of EU green bonds, consolidated tape providers, ESG rating providers, critical third-party providers. More importantly, we hear very good feedback from directly supervised entities, and we did not see any incidents in any of these areas.

Moreover, ESMA was the first EU authority to exercise product intervention powers in the interest of investors across the Union, prohibiting or limiting certain products or practices. ESMA has done immense work to promote transparency and reinforce investor protection in all its dimensions.

Clearly, I cannot list now all ESMA achievements throughout these years but still would like to mention the amazing work done to promote a single rulebook in the trading and post-trading space.

MIFID II, EMIR, CSDR, were huge construction sites and ESMA had a key role in making them a reality. Not just by developing rules and guidance, but also by providing the due coordination and setting up the underlying IT infrastructure. Well done!

So, I take this opportunity to express my deepest appreciation and sincere thanks to Verena, Steven, all members of ESMA's management board and Board of Supervisors over the years, and especially to ESMA's staff. Thanks for all your efforts over these 15 years.

Back to the present and our forward-looking agenda. Capital market integration, has been a long-standing objective of the European Union. Many of my predecessors have worked towards it, often in difficult circumstances. But I believe we are now at a point where real progress is increasingly a necessity.

For too long, Europe has not made full use of the potential of its Single Market. Our capital markets still act as a group of small markets – very small actually, when compared to our competitors.

Against the current geopolitical backdrop, the opportunity - and the need - for Europe to act decisively is clearer than it has perhaps been for some time. To finance Europe's key priorities, from defence, innovation and competitiveness to the green and digital transitions, we need a European capital market that is deep, liquid, and genuinely allows the flow of capital towards productive investments across all Member States.

This is the core objective of the Savings and Investments Union. To connect the dots between EU households' savings and the EU's investment needs that have for too long remained disconnected, to raise our level of ambition, and to give Europe the tools it needs to finance its own priorities and to choose its own strategic direction.

Today I would like to speak about the importance of scale, and the shared responsibility that is needed to get us there.

When we talk about capital market integration, we are really talking about building scale. About depth, size and volume. And in capital markets, scale matters. I know I do not need to explain that to this audience - you understand this well. But I think we need to say more about what scale can bring to the broader European project. So, I want to touch on that briefly.

A deeper and more integrated capital market would allow capital to move more quickly to where it is needed – wherever that may be in our Union. It would allow companies to raise financing at pace. It would allow investors to get more investment opportunities across Europe and to allocate their resources with greater confidence. And, in doing so, it would ensure that financing can quickly become available for the EU's most urgent priorities.

In other words, scale is not only about size. It is about strategic flexibility. It is about Europe having the financial depth to support growth and transformation, and to allow investors and businesses to seize opportunities in an independent and autonomous way.

We know what scale can do. The Single Market for goods has been one of Europe's great sources of strength. It has allowed companies to grow across borders, consumers to benefit from choice, and Europe to act with weight in the global economy. The challenge now is to bring that same logic to capital markets.

That means moving beyond 27 national markets connected at the edges, towards a capital market that is genuinely European in how it functions.

Scale will not happen by itself. It requires choices. It requires political action. And it requires us to accept that if we want markets at European-scale, we also need solutions at European-scale.

Ladies and gentlemen, if we are serious about taking the next step in European capital market integration, then all of us have a part to play. That includes the Commission, Member States, supervisors, co-legislators, as well as private stakeholders.

For many years, we have moved forward through incremental change. That has brought us some progress, but not enough to match our ambition. The Savings and Investments Union gives us the opportunity to do things differently - including in the way we supervise our markets.

Supervision is not a technical side issue. It is central to whether integrated capital markets can work. Without strong, consistent and credible supervision, the promise of a well-functioning single market for capital risks remaining just that, a promise.

Trust is the foundation of deep capital markets. Investors need to know that rules are applied consistently. Companies need predictability. Market participants need confidence that they are operating in a stable, fair and efficient system. And this is where ESMA's role is so important.

The Market Integration and Supervision Package proposes a different approach to supervision in the EU.

This means strengthened and developed supervisory convergence powers for ESMA, as well as direct supervisory powers where they can have the greatest impact for the integration of EU capital markets.

And I want to be clear that our proposal to strengthen ESMA's direct supervision mandate is not ideological, it is not proposing to enhance ESMA's role for the sake of transferring more powers at EU level. If we are collectively aiming to create a more integrated market, it makes sense that we would have more integrated supervision.

For ESMA, this goes beyond new powers and also outlines a broader challenge - to help build the kind of supervisory culture that Europe needs for deeper, more liquid and more competitive markets.

That means supervision that is agile and risk-based. Supervision that gives predictability, providing the same answer to the same question across the Union. Supervision that can address cross-border bottlenecks quickly and effectively. Supervision that supports innovation and gives investors and market participants the confidence to engage across borders.

But capital markets are not only about financial services providers, infrastructures and companies. They should bring direct benefits to citizens, including retail investors.

And yet too many people still face barriers when they try to invest. There are still too many products that are difficult to understand, fees that are not always transparent, or a lack of simple tools to compare options and make informed choices. This too is a supervisory challenge.

We need markets that are accessible, understandable and easier to engage with. This includes breaking down barriers that shield domestic players from competition and that prevent citizens from accessing products and services on a pan-European basis.

But at the heart of that investor journey is trust. People will only invest if they have confidence in the system, in the products and the services they are offered, and in the way the rules are supervised and enforced. Supervisors therefore have a crucial role to play in building that trust.

In many ways, trust is also the link between the three themes of today's conference. Trust, including between supervisors, is what allows markets to integrate. Stronger and more consistent supervision is what strengthens trust, including for retail investors. And trusted, well-functioning markets are what ultimately support the competitiveness of EU companies and the welfare of EU citizens.

Ladies and gentlemen, the success of European capital markets is a shared responsibility. It will require the Commission, co-legislators, Member States, national supervisors and market participants to work together. We need the right legal framework, the right institutional set-up, and the right supervisory approach.

If we get that balance right, supervision will not be seen as a constraint but as an enabler allowing financial market participants to operate more seamlessly across Europe. It will be one of the foundations of competitiveness, creating trust, strengthening markets, and helping Europe build the financial system it needs for the future.

For this to happen, we must finish our work on the market integration and supervision package with the same level of ambition with which it was drafted.

The momentum is still with us. The ‘One Europe, One Market Roadmap' was recently signed by the Council, Parliament, and Commission, collectively agreeing to conclude negotiations on several measures proposed under the SIU, including the MISP, by year-end.

This gives us an ambitious yet achievable deadline to work towards. Negotiations are never straightforward, especially on such a vast array of measures. And just like in all negotiations, we need to find the right balance. Of course, MISP goes far beyond supervision, covering important enabling measures on trading, post-trading, asset management, and DLT.

However, supervision remains one of the most sensitive topics, one that documents well the level of ambition of the package. To progress on our single market for financial services, MISP establishes a new balance between ESMA's role and that of national authorities: one which combines efficiency and quality of supervision, that will give full effect to shared rules and respect the diversity of investor cultures throughout the Union.

This would not be an outcome of a zero-sum game. National competent authorities and Member States will not lose out, even if their responsibilities change, once we have credible and efficient central supervision for specific sectors at EU level. The right balance will ensure better functioning capital markets, increased competitiveness and growth, and will therefore benefit all.

As negotiations progress on this file, and indeed on other files under the SIU, I will continue to come back to the principles agreed to under the ‘One Europe, One Market Roadmap': progress will require political commitment, active engagement and ambition from all institutional actors, at both EU and national level.

Enough declarations have been signed setting out our shared ambition for the SIU. What we need now is determined action.

In closing, I would like to underline that integration is not a technical exercise, it is a political choice that must be made.

The next step in capital market integration is within reach. By maintaining our ambition, we can connect what has too often remained disconnected, match our ambition with delivery, and strengthen Europe's ability to finance its own priorities.

Thank you.