ESMA anticipates EU financial regulation status quo

Europe is unlikely to follow the US in rolling back financial regulation if such a move materializes, at least in the short term, according to the executive director of the European Securities and Markets Authority.

Speaking at the European Alternative Investment Funds conference on Tuesday, Verena Ross said that while there were some areas in which there was regulatory overreach, now was not the time to be making widespread changes.

“We are currently in a period of consolidation, where legislation is being implemented. Once it is in place we will be in a better position to judge the situation, and we will take into account unintended consequences,” Ross said at the event organized by the Association of the Luxembourg Fund Industry.

It comes as speculation mounts that there will be widespread deregulation of financial services in the US under the new president, Donald Trump.

But while the regulator is unlikely to backtrack on measures that are being put into place, it does not foresee the introduction of further regulation or significant changes made during reviews of existing legislation.

“We are conscious of the costs of both implementing regulation and supervising compliance, and we are partly responsible for ensuring there is a balance between the costs and benefits – along with other supervisory agents,” Ross said.

She added ESMA was likely to be asked for advice on the Alternative Investment Fund Managers Directive when the European Commission begins its review in July, and as part of that review the agency will look at the wider regulatory picture and consider other pieces of legislation that feed into the funds management industry.

“Barriers to cross-border trading is likely to be a focus, and there will most probably be some fine tuning of, or efforts to further clarify, other aspects of the directive,” Ross said.