The ESMA, the EU’s regulator and supervisor for financial markets, has released a follow-up report examining how national watchdogs have strengthened their oversight of investment firms operating across borders.
The publication builds on a peer review of cross-border investment firm supervision, evaluating how far national competent authorities (NCAs) have gone in acting on recommendations first put forward in 2022. Six member states fall within its scope: the Netherlands, Germany, the Czech Republic, Luxembourg, Cyprus and Malta.
According to ESMA, the exercise has delivered gains across the full supervisory cycle and bolstered oversight of cross-border investment services throughout the EU Single Market. Progress was flagged in three areas. Authorisation controls have been tightened, with NCAs scrutinising firms’ cross-border plans more rigorously.
Supervision has also become more data-led and risk-based, with regulators drawing on data to track cross-border activity and calibrating their interventions according to the risks they identify. Finally, cooperation and enforcement have improved, with authorities pursuing more targeted supervisory actions, reporting enforcement cases where appropriate and deepening collaboration with one another.
The regulator nonetheless urged NCAs overseeing substantial outbound cross-border business to make certain their supervisory and enforcement frameworks are proportionate to the scale and sophistication of that activity, and that they adapt as risks evolve. It stressed that robust oversight of cross-border services is fundamental to guaranteeing investors the same standard of protection wherever those services originate.
Looking ahead, ESMA has called on all NCAs, especially those witnessing rapid growth in outgoing cross-border business, to consider the report’s findings. With retail cross-border investment services continuing to grow, the authority said it would keep prioritising supervisory convergence, closer cooperation between national regulators and data-driven, risk-based oversight, with the goal of reinforcing investor protection and supporting a well-functioning EU Single Market.
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