Give us the tools, outgoing markets watchdog chief tells EU

The outgoing chair of the European Securities and Markets Authority (ESMA) has delivered a clear parting message to EU policymakers: the market watchdog needs expanded powers and greater resources if it is to act as a genuinely independent supervisor across the bloc's financial sector.

The demand touches on a long-standing struggle in European financial regulation. Created in the wake of the 2008 global financial crisis, ESMA is charged with ensuring market stability and consistent investor protection across all member states. However, its direct supervisory reach remains limited, relying heavily on national regulators while operating under tight budgetary controls set by Brussels. According to the outgoing chief, without added financial muscle and direct supervisory authority, the agency cannot fully guarantee independent oversight.

For ordinary retail investors and pension savers, the effectiveness of EU financial supervision dictates how safely their money is handled across borders. When financial oversight varies between member states, firms can engage in regulatory arbitrage—choosing to base their operations in whichever EU country offers the most lenient supervision.

A stronger, better-funded central supervisor would mean consistent rules and consumer protections whether an investment firm operates out of Dublin, Frankfurt, or Paris. It also underpins broader economic goals: integrated, well-policed financial markets make it safer and cheaper for businesses across Europe to raise capital and grow.

In Brussels, asking for more money and broader powers is virtually a rite of passage for departing agency heads. Yet the request exposes a fundamental institutional fault line. Financial supervision in the EU is a constant tug-of-war between national capitals—who guard their local regulators and financial centres zealously—and the European Commission, which holds the purse strings and drafts the legislation.

While the European Parliament generally favours giving EU agencies bigger teeth to police cross-border markets, member states in the Council routinely resist handing direct enforcement authority to Paris. The result is a classic Brussels balance: an agency entrusted with protecting single-market integrity, but obliged to share power with twenty-seven national authorities under a strictly capped budget.

The outgoing chair's warning comes as EU institutions continue debating how to deepen the bloc's capital markets. The task of pressing for greater independence now falls to ESMA's next leadership team.

Any actual change to ESMA's budget or enforcement mandate would require the European Commission to table formal legislative proposals. Those proposals would then have to pass through the ordinary legislative procedure, requiring agreement from both the European Parliament and member states in the Council.