Steven Maijoor (ESMA): “A single integrated capital market in EU is building"

"The most important is that we supervise and maintain dialogue with organizations and credit rating agencies on a day-to-day basis,” says Steven Maijoor, Chair of the European Securities and Markets Authority (ESMA), in his exclusive interview with Leaders League.

Posted Tuesday, June 9th 2015
Steven Maijoor (ESMA): “A single integrated capital market in EU is building"
Leaders League. ESMA leads regulatory authorities of the financial markets: how do you harmonize the different countries' rules? Could you please give us some examples?
Steven Maijoor. We have various roles regarding our focus on the financial and securities markets. Our main role is to control systemic risks as we attempt to establish one rule for the European market, and also to insure this rule is supervised consistently by the 28 missional regulators on the board of ESMA, who make all the important decisions. We wish to create a single common market for the various financial markets across 28 European countries. This is the key role we are playing. A second crucial reponsibility of ours is to directly supervise credit rating agencies, and make sure they work on an integrated capital market in Europe.

Leaders League. Is it possible for ESMA to take disciplinary actions on companies?
S. M. We are defining the technical rules for the whole range of financial markets across Europe, including stock exchanges, hedge funds, and investment funds. In the past years our board has made rules of regulation,which have obviously had an important impact on the entire sector. While supervising credit rating agencies directly, we also have the authority to sanction them, and have a whole range of sanctions available. However, we use these sanctions at the end of the process, because the most important thing is that we maintain a supervisory role. For example, we go to these agencies and talk with them, offer them advice to change, and if they don’t wish to change in very special cases we move forward with enforcement. We are still, firstly, at the beginning of the supervision of credit agencies, as the ESMA was created in 2011. Last year the credit rating agency Standard & Poor’s was been sanctioned because they violated the rules. In 2014, two more agencies were sanctioned and sent to the IIO. We publish our decisions in order to make examples for market players.

Leaders League. Do you think that the market players are scared of the regulatory authorities?
S. M. I think that the regulatory institutions are not made to scare the companies. Our first role is not to sanction or enforce, but only to create rules. To make these rules we have much interaction and dialogue with market participants to make sure that the rules are applicable to them. Yet if they do not respect the rules, market players know that we will employ our disciplinary actions.

Leaders League. As you know the rules are different on the derivates products between the US and the European Union. Because of that, the international transmissions have been blocked. Do you work with the US for the uniformization of these regulations?
S. M. You should realize that capital markets are by definition global. Therefore you will have internationally consistent rules of regulation. But each country has a different legal processes to interpret these rules. On a high level, these rules are indeed coordinated between US and Europe, and also with Asia. If you look into the details there are many differences between the separate and independent political processes of countries. We are therefore working very hard with our worldwide colleagues to make sure that we are as consistent as possible as to avoid any gaps or overlaps, and to insure that the regulations work. At the same time we must realize that we need to work with rules that stem from the European and U.S. political systems, and there are all kinds of differences between them. The good news is there are no more problems within Europe thanks to the work of the ESMA, as there is one and only standard to apply.

Leaders League. Do you think Paris is an important player for financial regulation? 
S. M. All 28 members’ states are important in terms of financial regulation, as financial regulation is important for all the countries. This regulation is also for consumers buying a financial product or investing their small savings in an investment fund, so financial regulation is quite relevant in Europe, and Paris represents one of the biggest financial centers of the EU. AMF is really active within ESMA on the board level, and we have good relation with them.

Leaders League. In the past 4 years, what is your greatest success?
S. M. Our presence is not about big events. A regulator’s role is about building step-by-step a sound and stable financial market. I think it’s more relevant to ask what ESMA’s biggest impact is, and this can be seen in the single integrated capital market being built in the EU.

Edited by Pascale D'Amore