Areas of Union competence deriving from the Treaty (Article 114 of the Treaty on the Functioning of the European Union) The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market.

Competences of the Authority (Regulation (EU) No 1095/2010 of the European Parliament and of the Council and Regulation (EC) No 1060/2009 of the European Parliament and of the Council) Tasks — To develop draft regulatory technical standards. — To develop draft implementing technical standards. — To issue guidelines and recommendations. — To issue recommendations where a national competent authority has not applied sectoral acts or has applied them in a way which appears to be a breach of Union law. — To take individual decisions addressed to competent authorities in certain emergency situations and in settlement of disagreements between competent authorities in cross-border situations. — In cases concerning directly applicable Union law, to take individual decisions addressed to financial market participants, where: (i) a national competent authority has not applied sectoral acts or has applied them in a way which appears to be a breach of Union law and where the competent authority has not complied with a formal opinion of the Commission; (ii) in certain emergency situations where a competent authority does not comply with the decision of the Authority adopted, or (iii) in settlement of disagreements between competent authorities in cross-border situations where a competent authority has not complied with the decision of the Authority. — To issue opinions to the European Parliament, the Council or the Commission on all issues related to its areas of competence. — To collect the necessary information concerning financial market participants to carry out the duties assigned to it. — To develop common methodologies for assessing the effect of product characteristics and distribution processes on the financial position of financial market participants and on consumer protection. — To provide a centrally accessible database of registered financial market participants in the area of its competence where specified in sectoral legislation. — To issue warnings in the event that a financial activity poses a serious threat to its objectives. — To temporarily prohibit or restrict certain financial activities that threaten the orderly functioning and integrity of financial markets or the stability of the whole or part of the financial system in the Union in the cases specified and under the conditions laid down in sectoral legislation or if so required in the case of an emergency situation. — To participate in the activities of colleges of supervisors, including on-site examination, carried out jointly by two or more competent authorities. — To address any risk of disruption in financial services that is caused by an impairment of all or parts of the financial system and has the potential to have serious negative consequences for the internal market and the real economy. — To draw up additional guidelines and recommendations for key financial market participants, to take account of the systemic risk posed by them. — To conduct an inquiry into a particular type of financial activity or type of product or type of conduct in order to assess potential threats to the integrity of financial markets or the stability of the financial system and make appropriate recommendations for action to the competent authorities concerned. — To carry out tasks and responsibilities delegated by competent authorities. — To provide opinions to competent authorities. — To conduct peer reviews of the activities of competent authorities. — To coordinate between competent authorities, in particular where adverse development could potentially jeopardise the orderly functioning and integrity of financial markets or the stability of the financial system in the Union. — To initiate and coordinate Union-wide assessments of the resilience of financial market participants to adverse market developments. — To take decisions on applications for certification and registration of credit rating agencies and on withdrawal of such certification and registration. — To establish cooperation agreements with the relevant credit rating agency supervisory authorities of third countries. — To conduct investigations of and on-site inspections at the premises of credit rating agencies, rated entities and related third parties. — Where a credit rating agency has committed an infringement, to take decisions to withdraw its registration, temporarily prohibit it from issuing credit ratings, suspend the use for regulatory purposes of the credit ratings it issued, require the infringement to be brought to an end, and/or issue public notices. — Where a credit rating agency has committed an infringement intentionally or negligently, to take decisions to impose a fine.

Governance Board of Supervisors Composition Chairperson (non-voting); the head of the national public authority competent for the supervision of financial market participants in each Member State; one representative of the Commission (non-voting); one representative of the European Systemic Risk Board (non-voting); one representative of each of the other two European Supervisory Authorities (non-voting). Tasks Gives guidance to the work of the Authority and is in charge of taking decisions referred to in Chapter II of the founding Regulation. Management Board Composition Chairperson and six other members of the Board of Supervisors, elected by and from the voting members of the Board of Supervisors. The Executive Director and a representative of the Commission participate in meetings without the right to vote (though the representative of the Commission can vote on budgetary matters). Tasks Ensures that the Authority carries out its mission and performs the tasks assigned to it in accordance with the founding Regulation. Chairperson Representative of the Authority responsible for preparing the work of the Board of Supervisors and chairing the meetings of the Board of Supervisors and the Management Board. Appointed by the Board of Supervisors after having been heard by the European Parliament. Executive Director Appointed by the Board of Supervisors after confirmation by the European Parliament. In charge of the management of the Authority and prepares the work of the Management Board. Internal audit European Commission’s Internal Audit Service (IAS). External audit European Court of Auditors. Discharge authority European Parliament, acting on a recommendation from the Council.

Resources made available to the Authority in 2013 Final Budget Total budget: 28,189 million euro, including: Union subsidy: 8,6 million euro Contributions from National Competent Authorities: 12,9 million euro Fees from supervised entities: 6,53 million euro (Credit Rating Agencies: 5,7 million euro; Trade Repositories: 0,83 million euro) Staff as at 31 December 2013 — Statutory staff: 106 temporary staff posts authorised in the establishment plan, of which recruited: 102 — Contract staff: 25 contract staff posts planned in the budget; contract staff posts actually filled at 31.12.2013: 19 — Seconded National Experts: 14 Seconded National Expert posts planned in the budget; Seconded National Experts posts actually filled at 31.12.2013: 15

Products and services in 2013 — Monitoring financial stability. Issued several periodic risk reports and trend summaries of financial markets. — Conducted tailored economic research and impact assessments. — Contributed to ESRB work on central counterparties and systemic risk. — Developed benchmark principles and recommendations together with EBA. — Looked into impact of the Short-Selling Regulation. — Carried out reviews of retailisation in the EU. Published a report on retailisation, i.e. the sales of complex products to retail investors. — Expanded work on monitoring markets and financial innovation. Put in place a financial innovation framework. — Conducted in-depth analysis of innovative financial products and processes. Conducted analysis of bail-in securities and securitisation. Surveyed NCAs on the topics of captive placement and crowdfunding. — Monitored and analysed retail investor trends. — Worked on investor education. Became an associate member of the OECD International Network on Investor Education. — Prepared reinforced investor protection regime under MiFID II. Prepared for future investor protection work. — Issued remuneration guidelines for investment firms. Guidelines covered governance, design and control of pay schemes. — Warned investors about contracts for difference (CFDs). Published joint warning with EBA on dangers of investing in CFDs. — Issued jointly with EBA guidelines for complaints-handling for securities and banking. — Published three ESAs joint positions on principles for manufacturers’ product oversight and governance processes. — Held Joint Consumer Protection Day of the three ESAs in Paris. — Strengthened its credit rating agencies (CRA) supervision. Twenty-two CRAs registered, two certified. — Following the cross-CRAs investigation into the bank rating methodologies in 2012, the implementation of the resulting remedial actions was monitored in 2013 as part of on-going supervision. Published a report on sovereign ratings investigation. Carried out an assessment of 14 small and medium-sized CRAs focusing on the systems and controls put in place by the CRAs to ensure compliance with the regulation. — Assessed CRAs’ compliance with the new requirements focusing on the disclosure aspects of sovereign ratings, pricing policies and procedures. — Enhanced its CRA risk analysis framework. Looked into CRAs’ implementation of regulatory rule changes. Furthered ESA cooperation and cooperation with international authorities on CRA matters. — Conducted CRA policy-related work. Published guidelines and recommendations providing clarity on the scope of the CRA Regulation and the list of registered CRAs with their market shares. Published a discussion paper on CRA3 implementation and on the three draft Regulatory Technical Standards (RTS). Published the first advice concerning the feasibility of a network of smaller CRAs. — Authorised six trade repositories and took on supervision. — Participated in CCPs supervisory colleges. Finalised a framework written agreement for the establishment and functioning of the colleges of supervisors and a common risk assessment template. Began recognition of third-country CCPs — 35 third-country CCPs applied for recognition. — Published further advice on the equivalence between the EU regulatory regime for CRAs and the respective legal and supervisory frameworks of Argentina, Brazil, Mexico, Hong Kong and Singapore. — Provided implementing rules for EMIR. Published Q&A to promote consistent implementation of EMIR. This included: — Preparing technical details for clearing obligation — Commencing examination of pension scheme arrangements and intra-group transactions — Raising awareness of non-financial counterparties (NFC) on obligation — Issuing regulatory technical standards on CCP colleges — Publishing a final report on the guidelines and recommendations for interoperability arrangements, as mandated under EMIR — Issuing standards on OTC derivatives entered into by non-EU counterparties — Advising Commission on equivalence of third-country rules and EMIR — Preparing for Central Securities Depositories Regulation (CSDR) — Coordinating international derivatives dialogue — Prepared for future MiFID II mandates. — Submitted to the Commission the standards on acquisitions and increases in holdings in investment firms under current MiFID. Reviewed implementation of MiFID conduct of business rules. — Reviewed and clarified data reporting rules from a cross-regulatory perspective. — Clarified reporting of on-exchange derivatives. Prepared details for transaction reporting, order record keeping and reference data. — Advised Commission on review of the Short-Selling Regulation. — Prepared implementing measures of future Market Abuse Regulation (MAR). Consulted on MAR policy options for certain implementing measures. — Strengthened framework for retail investment funds. — Clarified impact of EMIR on the calculation of counterparty risks for UCITS. — Concluded supervisory cooperation arrangements for alternative investment funds with 46 non-EU authorities. — Continued clarifying rules for alternative investment funds (AIFMs). Published a final report on Draft RTS on types of AIFMs and submitted it to the Commission for endorsement. — Clarified scope of AIFMD. Published a final report on guidelines on key concepts of the AIFMD. Adopted remuneration guidelines for alternative investment fund managers. Published a final report on guidelines on sound remuneration policies under the AIFMD. — Clarified reporting requirements for alternative investment fund managers. Published guidelines on reporting obligations under the AIFMD. Addressed late transposition of the AIFMD. Issued an opinion on practical arrangements for the late transposition of the AIFMD. — Delivered first standards under Prospectus Directive (PD). The draft RTS and the report were submitted to the Commission. Updated framework for equivalence of third-country prospectuses. Prepared standards on transparency requirements for major shareholdings. — Published report on liability regimes under Prospectus Directive (PD). — Clarified concept of ‘acting in concert’ to international investors. Published a statement containing information on shareholder cooperation and acting in concert under the PD. — Promoted convergent application of Short-Selling Regulation. — Finalised guidelines on market making activities. Published guidelines on the exemption for market making activities and primary market operations. — Facilitated and coordinated the implementation of temporary bans. ESMA played its coordination role in eight instances in 2013. — Monitored settlement discipline and fails. — Contributed to the consistent application of International Financial Reporting Standards (IFRS) in the EU. Consulted on draft guidelines on enforcement of financial information. Published a consultation paper on proposed guidelines on the enforcement of financial information. — Compared IFRS and EU firms’ financial statements. Participated in the development of IFRS. Prepared standards for financial information. Monitored proposed rules on audit. — Facilitated development of code of conduct for EU proxy advising industry. — Reviewed Member States’ implementation of EU law. Amended methodology for peer reviews. Finalised a peer review on its Money Market Funds Guidelines.