Annual report 2017.
Date: 2018-07-13
Institutions: European Securities and Markets Authority
Subjects: EU office or agency, European security, activity report, financial control, financial market

esma

European Securities and  
Market s Authority

Annual Report
2017

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15 June 2018
ESMA20-95-916

 
 
Annual Report
2017

Photo credits:  © ESMA: cover page, page 4, 8, 12, 14, 39, 51, 58, 67 

© iStock: page 16, 21,24, 30, 42, 47, 54, 56, 61

Manuscript completed in June 2018

Neither ESMA nor any person acting on behalf of ESMA is responsible for the use that might be made of the following 
information.

Luxembourg: Publications Office of the European Union, 2018

Print 

PDF 

ISBN 978-92-95202-16-0 

doi:10.2856/933781 

ISSN 2443-6739 

EK-AA-18-001-EN-C

ISBN 978-92-95202-15-3 

doi:10.2856/280074 

ISSN 2443-6747 

EK-AA-18-001-EN-N

© European Securities and Markets Authority, 2018

Reproduction is authorised provided the source is acknowledged.

For any use or reproduction of photos or other material that is not under the ESMA copyright, permission must be sought 
directly from the copyright holders.

Table of contents

Chair’s foreword  ................................................................................................................................................ 5

Executive Director’s foreword  ........................................................................................................................... 9

1  ESMA’s mission and objectives  12

1.1.  Mission, objectives and activities  ......................................................................................................... 13

1.2.  ESMA’s key priorities for 2017  .............................................................................................................. 14

1.3.  Governance and organisation  .............................................................................................................. 14

2  ESMA’s achievements against its 2017 objectives   16

2.1.  Promoting supervisory convergence  .................................................................................................... 17

2.2.  Assessing risks to investors, markets and financial stability  ................................................................ 29

2.3.  Completing a single rulebook for EU financial markets  ........................................................................ 32

2.4.  Direct supervision of specific financial entities  ..................................................................................... 37

2.5.  Joint Committee  .................................................................................................................................... 42

2.6.  ESMA as an organisation  ..................................................................................................................... 44

2.7.  Management  ......................................................................................................................................... 52

2.8.  Assessment of the effectiveness of the Internal Control Systems  ....................................................... 53

2.9.  Management assurance  ....................................................................................................................... 55

3  Annexes    58

ANNEX I — Access to documents requests in 2017  ...................................................................................... 59

ANNEX II — Reporting on key performance indicators  ................................................................................. 60

ANNEX III — ESMA’s Boards and Standing Committees  .............................................................................. 61

ANNEX IV — 2017 organisational chart as at 31 December 2017  ................................................................. 64

ANNEX V — Establishment plan and benchmarking exercise  ....................................................................... 65

ANNEX VI — 2017 Annual Accounts and Work Programmes  ....................................................................... 68

Table of contents 

|  3

Steven Maijoor

CHAIR
EUROPEAN SECURITIES AND MARKETS AUTHORITY

Chair’s foreword

Putting  in  place  the  architecture  for  one  of  the 
greatest  changes  to  financial  markets,  marked  2017 
as  a  milestone  in  the  history  of  ESMA.  While  the 
preparations for the implementation of MiFID II/MiFIR 
shaped  much  of  last  year,  ESMA’s  core  mission  of 
enhancing  the  protection  of  investors  and  promoting 
stable  and  orderly  financial  markets  remained  the 
bedrock of our work.

Implementing  changes  contributing  to  our  mission 
requires  that  ESMA  delivers  on  its  key  priorities.  In 
2017,  ESMA  continued  to  build  towards  a  common 
supervisory  culture.  Through  coordinating  and 
facilitating  the  consistent  application  of  rules  across 
the  EU,  we  have  made  significant  progress  in  the 
further integration of European capital markets.

ESMA’s supervisory convergence work addresses the 
fundamental  question  for  any  European  supervisory 
authority, how to improve the functioning of the internal 
market,  and  ensure  sound,  effective  and  consistent 
supervision.  Supervisory  convergence  implies  for 
example  sharing  best  practices  and  ensuring  that 
the EU internal market works effectively, by removing 
barriers,  creating  a  level-playing  field  and  preventing 
regulatory arbitrage.

In a year defined by the preparation for MiFID II/MiFIR, 
ESMA  prioritised  preparing  markets  and  NCAs  to 
ensure  convergent  supervision  of  MiFID  II/MiFIR.  In 
2017, ESMA published a variety of Guidelines, Q&As 
and  Opinions  from  its  supervisory  toolbox  to  support 
the  correct  and  sound  application  of  MiFID  II/MiFIR, 
while  supporting  the  implementation  by  financial 
market  participants.  Ahead  of  the  starting  date, 
ESMA  published  opinions  on  commodity  derivative 
position limits, Transitional Transparency Calculations, 
and  issued  239  opinions  on  waivers  from  pre-trade 
transparency.

In parallel ESMA continued to assess risks to investors, 
and financial stability in the financial markets within its 
remit. ESMA continues to identify emerging trends, risks 
and vulnerabilities, and where possible opportunities, 
in a timely fashion so that they can be acted upon. No 
item defined this approach more in 2017 than the rapid 
growth of Initial Coin Offerings (ICOs) and the strong 
increase in the value and number of virtual currencies. 
These  developments  prompted  ESMA  to  analyse  the 
relevant risks and resulted in two public statements on 
ICOs, notably highlighting the potential risks to investors 
of  investing  in  ICOs.  ESMA  also  laid  the  groundwork 

for product intervention measures regarding CFDs and 
binary  options  that  were  implemented  in  the  first  half 
of 2018.

The  vastly  expanded  requirements  to  report,  collect 
and  disclose  data  bring  about  new  opportunities  and 
challenges. ESMA is committed to enlarging the scope 
of  its  data  management  and  analysis  to  support  all 
of  our  activities.  The  approval  of  the  Data  Strategy 
Implementation  Plan 
represented 
a  significant  step  forward,  as  it  envisages  a  more 
intense  and  efficient  use  of  data  by  ESMA  and  the 
NCAs.

for  2018-2022 

Especially  our  work  on  MiFID  II/MiFIR  includes 
significant  preparation  and  maintenance  of  related  IT 
and data collection systems.

2017 also saw further development and consolidation 
of ESMA’s single rulebook, which aims at strengthening 
regulation and creating a level-playing field across the 
EU. ESMA finalised one of the key elements of MiFID II/ 
MiFIR with the delivery of the draft Technical Standard 
regarding  the  trading  obligation  for  derivatives.  We 
also  published  three  consultation  papers  to  develop 
the draft Technical Standards ESMA needs to deliver 
for the Securitisation Regulation. ESMA’s preparation 
for  another  key  implementation  date  saw  us  publish 
12  draft  technical  standards  under  the  Benchmarks 
Regulation.

ESMA as the sole supervisor for credit rating agencies 
(CRAs) and trade repositories (TRs) made concerted 
efforts in the development and use of supervisory tools 
in achieving its objectives regarding direct supervision. 
ESMA’s  commitment  to  address  supervisory  issues 
also  require  it,  when  necessary,  to  take  enforcement 
action. In 2017, ESMA levied its largest fines to date, 
totalling  €1.24  million,  for  infringements  of  the  CRA 
Regulation.  We  also  developed  new  tools  to  improve 
the risk assessment process and framework, allowing 
ESMA to better identify and evaluate supervisory risks. 
Looking forward to 2018, ESMA will continue to engage 
with  CRAs  and  TRs  regarding  strategy,  governance, 
operational  matters,  and  preparations  for  when  the 
United Kingdom (UK) leaves the EU.

Political  developments  have  demanded 
that  we 
adequately  prepare  for  a  new  relationship  between 
the  UK  and  EU.  While  it  is  yet  unclear  what  shape 
this  future  relationship  will  take,  ESMA  has  worked 
to  ensure  a  consistent  supervisory  approach  to 

Chair’s foreword 

|  5

safeguard  investor  protection,  the  orderly  functioning 
of financial markets and financial stability ahead of any 
final agreement. In 2017, ESMA published four Brexit-
related opinions in order to supplement the legislative 
and regulatory framework and set up a network in order 
to provide a forum for reporting and discussion among 
NCAs  regarding  UK  market  participants  seeking  to 
relocate entities, activities or functions to the EU27.

Looking towards another issue that will greatly influence 
ESMA’s future, the European Commission’s review of 
the operations of the European Supervisory Authorities 
(ESAs) resulted in a legislative proposal in 2017. ESMA 
remains committed to prepare and execute any future 
mandates resulting from this proposal.

ESMA  maintains  an  open  dialogue  with,  and  is 
accountable  to,  the  EU  institutions  –  the  European 
Parliament  and  the  Council  –  including  attending 
regular  scrutiny  hearings  at 
the  Economic  and 
Monetary Policy Committee (ECON) of the Parliament.

2017  was  another  productive  year  for  the  ESA’s. 
A  particular  highlight  was  the  Joint  ESAs  Consumer 
Protection  Day,  which  facilitated  the  ESAs  to  engage 
with  key  –  and  new  –  stakeholders,  especially 
issues 
consumers’  representatives,  on 
facing  retail  investors  and  consumers  across  the 
EU.  Moreover,  the  ESAs  conducted  preparation  and 
implementation  work,  including  issuing  Q&As,  ahead 
of the arrival of the PRIIPs KID.

important 

In  2017,  ESMA  concluded  7  MoUs  with  10  different 
authorities and recognised 9 additional Third Country-
CCPs. It is important that ESMA continues to influence 
and  shape  the  global  supervisory  and  regulatory 
agenda  through  our  participation  in  IOSCO  and  the 
FSB.  We  continued  our  active  participation  in  the 
IOSCO  Board,  several  IOSCO  policy  committees  as 
well as its European Regional Committee. ESMA and 
IOSCO  joined  forces  in  2017  in  order  to  prepare  for 
GDPR and to allow for a continuation of exchanges of 
information.

the  Board  of  Supervisors  and 

I  want  to  thank  my  colleagues  from  the  EU  national 
authorities, 
the 
Management  Board.  Real  achievement  for  ESMA 
comes from coordination and cooperation with others, 
and  I  want  to  pay  tribute  to  the  invaluable  role  they 
play in ensuring ESMA can meet its objectives. Their 
support will be crucial in the period ahead. I also want 
to acknowledge the excellent cooperation we have with 
our fellow authorities in the Joint Committee, and with 
the  European  institutions  –  Commission,  Parliament 
and  Council  –  and  the  contributions  made  by  our 
stakeholders.

My  final  word  of  appreciation  goes  to  ESMA’s  staff. 
Everything that ESMA achieved in 2017 is down to their 
hard work, dedication and commitment to the mission 
and aims of this organisation.

Steven Maijoor

ESMA  plays  an 
international 
important  role 
cooperation  on  regulatory  and  supervisory  matters. 

in 

Chair
European Securities and Markets Authority

6 

|  Chair’s foreword

verena roSS

EXECUTIVE DIRECTOR
EUROPEAN SECURITIES AND MARKETS AUTHORITY

Executive Director’s foreword

The  preparations  for  the  implementation  of  MiFID  II/
MiFIR,  one  of  the  greatest  changes  to  European 
financial  markets,  represented  a  unique  challenge 
that  demanded  the  very  best  of  our  resources  and 
organisation 
remained 
throughout  committed  to  its  objectives  of  investor 
protection, orderly markets and financial stability.

throughout  2017.  ESMA 

2017  marked  the  year  that  ESMA  became  a  truly 
integral  part  of  EU  capital  markets  infrastructure 
through data reporting and associated IT systems, built 
to  ensure  that  MiFID  II/MiFIR  drives  positive  change 
for the market.

For  MiFID  II  to  succeed  in  2018,  it  was  crucial  that 
ESMA  effectively  prepared  markets,  NCAs  and  our 
own  IT  systems  and  processes  throughout  2017. 
The  underlying  IT  infrastructure  that  is  pivotal  to  the 
implementation of MiFID II / MiFIR demanded ESMA’s 
full  attention.  With  the  increased  scope  of  regulatory 
requirements  on  reporting  entities  in  the  areas  of 
reference  data,  transparency,  double  volume  cap 
and  transaction  reporting,  it  was  crucial  that  ESMA 
undertook the groundwork in 2017 to ensure a smooth 
transition  into  the  reporting  regimes  under  MiFID  II. 
To  assist  market  participants  with  the  new  reporting 
requirements, ESMA released technical requirements 
and  templates  providing  detail  about  the  relevant 
reporting  requirements  and  began  data  collection  in 
2017.

Going  beyond  MiFID  II/  MiFIR,  ESMA  has  made 
a significant contribution to ensuring the sound, efficient 
and  consistent  implementation  of  new  EU  legislation, 
while maintaining a strong emphasis on all aspects of 
supervisory convergence. ESMA’s work on supervisory 
convergence  in  2017  has  covered  a  wide  range  of 
topics  ranging  from  investor  protection,  convergence 
in the supervision of EU CCPs to improving the quality 
of data collected by NCAs.

Across all of ESMA’s responsibilities, data and how it is 
reported, analysed and used drove an extremely busy 
year, with EU IT projects remaining a key undertaking. 
These  regulatory  projects  aim  to  develop  IT  systems 
that  support  supervisory  convergence  and  exchange 
of  financial  data  amongst  NCAs  and  between  NCAs, 
ESMA and the public. The provision of these systems 
demands  substantial  time  and  resources.  At  the  end 
of  2017  ESMA  was  managing  40  applications  (+33% 
compared to 2016) and 237 virtual servers. Last year, 
work  continued  on  two  major  IT  projects  delegated 

to  ESMA  by  the  NCAs,  FIRDS  and  TRACE,  which 
strive to assist the coherent implementation of key EU 
legislation.  Full  implementation  of  FIRDS,  one  of  the 
MiFID related projects, was finalised during 2017, with 
the  first  collection  of  financial  instruments  reference 
data  taking  place  towards  the  end  of  the  year.  The 
TRACE project was also completed in 2017, and now 
offers a single point of access for authorities querying 
and retrieving data from Trade Repositories (TRs).

Reliable  data  is  a  prerequisite  to  fair  play  and 
transparency  in  financial  markets.  In  2017,  ESMA 
carried  out  a  variety  of  activities  aimed  at  enhanced 
data quality, focusing first of all on completeness and 
subsequently on the quality of the data reported. ESMA 
is  harmonising  data  reporting  rules  across  different 
regulations,  thus  facilitating  firms’  reporting  and  the 
supervisory use of data, including promoting common 
identifiers.  ESMA 
data  reporting  standards  and 
pays  particular  attention  and  allocates  dedicated 
resources to ongoing monitoring of data quality and its 
improvement.

In  undertaking  our  wide-ranging  activities,  ESMA  is 
mindful of the limited resources available. Nevertheless, 
each  year  ESMA  challenges  itself  to  ensure  that 
it  constantly  delivers  its  objectives  effectively  and 
efficiently.  To  ensure  that  ESMA  continues  to  mature 
as an organisation, we have implemented a number of 
actions to further enhance our operational effectiveness 
in 2017. For example, ESMA advanced considerably in 
terms  of  digitalisation  of  its  administrative  processes 
through  paperless  and  e-administration  tools,  and 
made  important  progress  in  the  fields  of  IT  security, 
cybersecurity and business continuity.

ESMA’s record of accomplishment is built upon several 
fundamental  principles.  As  an  organisation  we  adopt 
a high level of transparency and engage regularly with 
European and international stakeholders. In 2017, we 
have  for  example  enhanced  stakeholders’  access  to 
ESMA  guidance  with  the  launch  of  a  new  Q&A  tool, 
providing  easy  access  for  stakeholders  to  consult 
existing Q&A’s and submit new questions.

Being  a  transparent  organisation  means  opening  our 
doors to many visitors. In 2017, ESMA organised 742 
meetings and workshops within ESMA’s premises and 
received 8,056 external participants to these meetings. 
In  October,  ESMA  hosted  its  first  ever  conference, 
focusing on The State of European Financial Markets, 
in  which  political  decision  makers,  global  regulators 

Executive Director’s foreword 

|  9

and high-profile financial industry leaders gathered to 
discuss the current state of EU financial markets. The 
event was also streamed free online.

Where exactly ESMA will open its doors in the future 
is  the  ultimate  question  behind  the  launch  of  a  key 
new multi-annual project: ESMA 2020 Premises. This 
project  aims  to  ensure  that  ESMA  will  have  suitable, 
cost-efficient  and  duly  approved  premises  at  the 
beginning  of  2020  after  the  expiration  of  our  current 
lease contract on 31 December 2019.

Finally, ESMA is a forward-looking organisation. 2017 
has increased the responsibilities of this organisation, 
not  just  with  the  implementation  of  MiFID  II  /MiFIR. 
We  have  also  prepared  for  possible  future  changes 
by closely monitoring the proposals put forward by the 
Commission  in  September  2017  in  the  ESAs  review. 
What ESMA has achieved and learnt as an organisation 

over  the  last  years,  and  has  further  built  on  in  2017, 
will prove invaluable in the years ahead. Putting us in 
a stronger position to meet our objectives of enhancing 
the  protection  of  investors  and  promoting  stable  and 
orderly  financial  markets,  whatever  the  co-legislators 
will decide on the various legislative proposals that are 
currently under consideration.

In this important and challenging year, the commitment 
and  professionalism  of  all  my  ESMA  colleagues  has 
been  for  me  the  defining  theme  of  2017.  I  want  to 
thank everyone who has contributed to delivering this 
extremely busy agenda, in a year that truly demonstrated 
the  capabilities,  strengths  and  commitment  of  this 
organisation and its staff.

Verena Ross

Executive Director
European Securities and Markets Authority

10 

|  Executive Director’s foreword

1 ESMA’s mission 

and objectives

The  European  Securities  and  Markets  Authority 
(ESMA)  is  an  independent  EU  Authority,  established 
under the ESMA Regulation1, charged with enhancing 
the  protection  of  investors  and  promoting  stable  and 
orderly financial markets. As an independent authority, 
ESMA  achieves  these  aims  by  assessing  risks  to 
investors,  markets  and  financial  stability;  completing 
a single rulebook for EU financial markets; promoting 
supervisory  convergence;  and  directly  supervising 
specific financial entities.

ESMA forms part of the European System of Financial 
Supervision  (ESFS)  a  multi-layered  system  of  micro 
and  macro-prudential  authorities  established  by 
the  European  institutions  to  ensure  consistent  and 
coherent financial supervision in the EU. This system 
consists of the three European Supervisory Authorities 
(ESAs): ESMA, based in Paris, the European Banking 
Authority (EBA), based in London, and the European 
Insurance  and  Occupational  Pensions  Authority 
(EIOPA),  based  in  Frankfurt,  along  with  the  National 
Competent Authorities (NCAs) of the Member States. 
ESMA, together with the EBA and EIOPA, forms part 
of the Joint Committee of the ESAs2 (Joint Committee) 
which  works  to  ensure  cross-sector  consistency  and 
joint positions in the area of the supervision of financial 
conglomerates  and  other  cross-sector  issues.  The 
European  Systemic  Risk  Board  complements  the 
ESFS.

ESMA is accountable to the European Parliament and 
the European Council and works in close liaison with the 
European Commission (hereinafter ‘the Commission’).

11 Mission, objectives and 

activities

ESMA’s mission, based on its Regulation, is to enhance 
the  protection  of  investors  and  promote  stable  and 
orderly markets in the European Union (EU).

Sound  and  effective  regulation  of  securities  markets 
is  key  to  the  integrity,  efficiency  and  growth  of  the 
EU’s  financial  markets  and  economy,  and  effective 
regulation and supervision is a vital factor in securing 
and  maintaining 
confidence  amongst  market 
participants. In order to foster these conditions, ESMA 
works to improve harmonisation in both regulation and 
supervisory practices.

In  order  to  achieve  harmonised  rule  implementation 
throughout the EU, ESMA serves as a standard setter 
in relation to securities markets and provides technical 
advice  to  the  Commission.  It  also  has  an  important 
role in directly supervising financial players with a pan-
European  profile,  currently  credit  rating  agencies 
(CRAs)  and  trade  repositories  (TRs).  ESMA  also 
participates in the supervision of central counterparties 
(CCPs) through supervisory colleges.

The Annual Report is an important accountability tool 
describing ESMA’s delivery against its objectives and 
Annual Work Programme3.

ESMA’s role can be better understood through its three 
objectives.

1 

Investor protection: to have the needs of financial 
consumers  better  served  and  to  reinforce  their 
rights  as  investors  while  acknowledging  their 
responsibilities.

2  Orderly  markets: 

integrity, 
transparency,  efficiency,  and  well-functioning  of 
financial markets and robust market infrastructures.

to  promote 

the 

3  Financial  stability:  to  strengthen  the  financial 
system  in  order  to  be  capable  of  withstanding 
shocks and the unravelling of financial imbalances 
while fostering economic growth.

The  three  objectives  are  interlinked:  for  example, 
investor  protection  and  orderly  markets  feed  into 
overall financial stability. At the same time, increased 
financial stability supports orderly markets and investor 
protection.

ESMA  achieves  its  mission  within  the  ESFS  through 
active cooperation with NCAs as well as with the EBA 
and  EIOPA,  both  individually  and  through  the  Joint 
Committee.  ESMA  has  a  unique  position  within  the 
ESFS, focusing on the securities and financial markets 
dimension  and  the  overarching  European  aspects  of 
these objectives.

The four activities that help ESMA achieve its mission 
and objectives are the following.

Single  rulebook:  the  purpose  of  completing 
a  single  rulebook  for  EU  financial  markets  is  to 
enhance the EU single market by creating a level 
playing field for all market participants across the 
EU.  ESMA  contributes  by  developing  technical 
standards and by providing advice to EU institutions 
on legislative projects.

1  ESMA Regulation 1095/2010
2  Joint Committee of the European Supervisory Authorities.

3  ESMA/2016/1419 2017 Work Programme

ESMA’s mission and objectives 

|  13

Risk  monitoring  and  analysis:  the  purpose  of 
assessing risks to investors, markets and financial 
stability  is  to  spot  emerging  trends,  risks  and 
vulnerabilities  and,  where  possible,  to  identify 
opportunities  so  that  they  can  be  acted  upon  in 
a timely fashion. ESMA uses its unique position to 
identify  market  developments  that  pose  a  risk  to 
financial stability, investor protection or the orderly 
functioning of the European financial markets.

Supervisory convergence: this is the consistent 
implementation and application of the same rules 
using  similar  approaches  across  the  EU  Member 
States.  The  purpose  of  promoting  supervisory 
convergence  is  to  ensure  a  level  playing  field  of 
high-quality  regulation  and  supervision  without 
regulatory arbitrage or a race to the bottom between 
Member  States.  The  consistent  implementation 
and application of rules ensures the safety of the 
financial  system,  protects  investors  and  ensures 
orderly markets.

Supervision:  ESMA  is  the  direct  supervisor  of 
specific  financial  entities:  CRAs  and  TRs.  These 
entities  form  essential  parts  of  the  EU’s  market 
infrastructure.  ESMA’s  CRA  supervision  ensures 
the quality of ratings and helps to protect investors’ 
interests,  while  ESMA’s  TR  supervision  is  key  to 
ensuring  data  quality  and  providing  transparency 
on derivatives markets.

ESMA’s  four  activities  are  closely  linked.  Insights 
gained from risk assessment feed into the work on the 
single  rulebook,  supervisory  convergence  and  direct 
supervision, and vice versa. We consider supervisory 
convergence  to  be  the  manifest  implementation  and 
application of the single rulebook. The direct supervision 
of CRAs and TRs benefits from and also feeds into our 
risk assessment and the single rulebook activities.

12 ESMA’s key priorities 

for 2017

In 2017 ESMA focused on delivering the following key 
priorities that had been agreed in its 2017 annual work 
programme:

•  Supervisory  convergence: 

implementation  of 

MiFID II and MiFIR.

•  Assessing risks: focus on data quality.

•  Single rulebook: Benchmarks and Capital Markets 

Union.

•  Direct  supervision:  supervision  of  CRAs  and  TRs 

and their ancillary activities.

13 Governance and 
organisation

Governance and management

Two decision-making bodies govern ESMA: the Board 
of Supervisors (BoS) and the Management Board.

Board of Supervisors

In  addition  to  ESMA’s  Chair,  the  BoS  is  composed  of 
the  heads  of  the  28  EU  Member  State  NCAs  who  are 
responsible  for  securities  regulation  and  supervision,4 
Iceland,  Liechtenstein, 
from 
while 

the  authorities 

4  Where there is more than one national authority in a Member 
State, authorities will agree on which of their heads will represent 
them.

14 

|  ESMA’s mission and objectives

Norway  and  the  EFTA  Surveillance  Authority5  are  also 
members,  since  October  2016,  albeit  without  voting 
rights.  In  addition,  an  observer  from  the  Commission 
and representatives from the EBA, EIOPA and the ESRB 
also attend. The Executive Director attends the BoS.

The  BoS  guides  the  work  of  the  Authority  and  has 
the  ultimate  decision-making  responsibility  regarding 
a broad range of matters, including the adoption of ESMA 
Standards,  Opinions,  Recommendations,  Guidelines, 
the issuance of Advice to the EU institutions, and taking 
authorisation  and  enforcement  decisions.  The  BoS  is 
supported  by  a  number  of  Standing  Committees  and 
working groups that deal with technical issues.

The  BoS’  current  members  and  the  summaries  of  its 
2017 meetings can be found on ESMA’s website.6

Since 2011, ESMA’s full-time Chair is Steven Maijoor and 
its Executive Director is Verena Ross. Both are based at 
ESMA’s premises in Paris and commenced their second 
mandate of five years during the course of 2016.

The  Chair  is  responsible  for  preparing  the  work  of  the 
BoS  and  chairs  both  its  meetings  and  those  of  the 
Management  Board.  He  also  represents  the  Authority 
externally.  In  January  2016,  Anneli  Tuominen  of  the 
Finnish Financial Supervisory Authority (FIN-FSA) was 
appointed Vice-Chair.

The  Executive  Director  is  responsible  for  the  day-to-
day  running  of  the  Authority,  including  staff  matters, 
developing  and 
the  annual  Work 
Programme, developing the draft budget and preparing 
the work of the Management Board.

implementing 

Management Board

The  Management  Board’s  current  members  and  the 
summaries of its 2017 meetings are available on ESMA’s 
website.7

Securities and Markets Stakeholder 
Group

The Securities and Markets Stakeholder Group (SMSG) 
was established under the ESMA Regulation to facilitate 
consultation  with  stakeholders  in  areas  relevant  to 
ESMA’s tasks. The members represent financial market 
participants and their employees, consumers and other 
users  of  financial  services,  academics  and  small  and 
medium-sized  enterprises  (SMEs).  ESMA  consults  the 
SMSG on all its draft Technical Standards and Guidelines 
in order to ensure input from stakeholders.

The members of the SMSG, made up of 30 individuals, 
serve  a  term  of  two  and  a  half  years.  The  current 
composition  of  the  group  began  its  mandate  on  1  July 
2016 and is chaired by Professor Rüdiger Veil, Chair for 
Private Law and Business Law, Munich Centre for Capital 
Markets  Law  at  the  Ludwig-Maximilians-Universität. 
He  is  supported  by  joint  Vice-Chairs  Christiane  Hölz, 
who represents users of financial services, and Jarkko 
Syyrilä,  who  represents  financial  market  participants. 
The SMSG held seven meetings in 2017, two of which 
were held together with the BoS.

The Group issued advice, opinions and reports in 2017 
on  issues  such  as  the  MiFID  II,  product  governance, 
big data, the ESAs review, suitability, prospectuses and 
SMEs,  all  of  which  concern  ESMA’s  activities.  Their 
reports as well as the summaries of the group’s meetings 
can be found on ESMA’s website.8

In addition to the ESMA Chair, the Management Board 
is composed of six members selected from the BoS by 
its  members.  The  Executive  Director,  the  Vice-Chair 
and a representative of the Commission attend as non-
voting participants (except on budget matters where the 
Commission has a vote).

The  main  role  of  the  Management  Board  is  to  ensure 
that the Authority carries out its mission, and performs 
the  tasks  assigned  to  it  in  accordance  with  the  ESMA 
Regulation. It focuses in particular on the management 
and  supervisory  aspects  of  the  Authority,  such  as  the 
development  and  implementation  of  a  multi-annual 
Work Programme, as well as budget and staff resource 
matters.

Day-to-day management

The  Executive  Director  and  the  Heads  of  Department 
are  responsible  for  ESMA’s  day-to-day  management 
and for forming the management team. ESMA had seven 
departments in 2017 and the heads of each department 
are  responsible  for  the  activities  in  their  respective 
business  areas.  Planning  and  monitoring  of  activities 
are  a  crucial  part  of  the  management  team’s  role  and 
contribute to ESMA’s internal control system.

The  Chair,  Executive  Director  and  management  team 
meet  weekly  to  discuss  the  preparations  of  the  Board 
meetings,  strategic  activities  and  cross-organisational 
issues.

5  EFTA Surveillance Authority website on 02/05/2017.
6  Board of Supervisors.

7  Management Board
8  Securities and Markets Stakeholder Group.

ESMA’s mission and objectives 

|  15

2

ESMA’s 
achievements 
against its  
2017 objectives

21 Promoting supervisory 

convergence

ESMA is required, under its Regulation, to foster super-
visory convergence in order to improve the functioning 
of the internal market, including a sound, effective and 
consistent supervision. The Regulation specifies a num-
ber of tools ESMA can use to achieve this aim, and ena-
bles it to devise additional tools where necessary.

Supervision  by  the  NCAs,  together  with  supervisory 
convergence fostered by ESMA, is important to ensure 
that the EU internal market works effectively by creating 
a level playing field and preventing regulatory arbitrage 
or a race to the bottom.

Supervisory  convergence 
implies  sharing  best 
practices and realising efficiency gains for both NCAs 

and the financial industry. This activity is performed in 
close cooperation with NCAs, amongst others through 
a  dedicated  Standing  Committee  set-up  to  deal  with 
transversal supervisory convergence matters. ESMA’s 
position in the ESFS makes it qualified to conduct peer 
reviews, set up EU data reporting requirements, conduct 
thematic studies and common work programmes, draft 
opinions, guidelines and Q&As, but also to build a close 
network to exchange views on day-to-day supervisory 
issues, share best practices and train supervisors.

ESMA  works  to  ensure  the  consistent  and  correct 
application  of  EMIR  through  its  active  co-ordination 
across CCP colleges.

ESMA actively supports international supervisory co-
ordination  and  convergence,  for  example  through  its 
participation in IOSCO.

Key deliveries and successes

Protecting EU consumers from speculative financial products

In recent years ESMA and several NCAs have observed a rapid increase in the marketing, distribution and sale 
of contracts for differences, including rolling spot forex contracts for difference (CFDs) and binary options to retail 
investors across the EU.

The inherent complexity and risk associated with these products, the marketing, distribution and sale through online 
channels and the associated aggressive marketing techniques used by a number of firms have led to significant 
investor protection concerns. Several NCAs have also conducted analyses or studies showing that between 74% and 
89% of clients trading in these products lose money.

In 2017, ESMA continued to co-ordinate the activities of a Joint Group of host NCAs and the Cyprus Securities and 
Exchange Commission (CySEC) in its capacity as home NCA. The work of the group focused on issues arising in 
relation to 24 Cyprus-based investment firms offering CFDs, binary options and other speculative products to retail 
clients throughout the EU on a cross-border basis. ESMA had the opportunity to present the objectives pursued 
through the work of this group in a hearing before the European Parliament in July 2017.

Through the work of the Joint Group and the execution of CySEC’s own Supervisory Action Plan, CySEC has 
introduced and implemented a significant number of changes to the supervision of conduct of business of Cyprus 
Investment Firms. This is alongside supervisory actions which include the imposition by CySEC of pecuniary 
sanctions of over €3 million on some firms, and the withdrawal of 3 firms from their marketplace.

Product intervention, CFDs and binary options

Further to the risks identified in past years in relation to CFDs, binary options and work in the context of the Joint 
Group, ESMA issued an Opinion in January 2017 regarding the scope of the product intervention powers under the 
MiFIR. Both NCAs and ESMA can exercise these powers from 3 January 2018. The powers will only apply to MiFID 
investment firms marketing products that pose risks to retail investors, market integrity and financial stability in the 
EU, but they do not cover Undertakings for Collective Investment in Transferrable Securities (UCITS) management 
companies and Alternative Investment Fund Managers (AIFMs). ESMA was concerned about the potential for 
regulatory arbitrage and the potential reduction in effectiveness of future intervention measures, and believed that the 
EU institutions should address this issue.

ESMA issued a statement in December 2017 on its preparatory work on contracts for difference and binary options 
and other speculative products to retail investors. ESMA has been concerned about the risks to retail investors for 
some time and therefore had been conducting ongoing monitoring and supervisory convergence work in this area. The 
statement indicated that ESMA may consider taking action using its product intervention powers under MiFIR in 2018.

ESMA’s achievements against its 2017 objectives  

|  17

Ensuring convergent supervision of MiFID

A priority for ESMA in 2017 was to prepare the markets and NCAs for the application of the Markets in Financial 
Instruments Directive II (MiFID II) and the Markets in Financial Instruments Regulation (MIFIR), which took place 
on 3 January 2018. ESMA published supervisory tools (Guidelines, Q&As, Opinions) to drive the correct and sound 
implementation of MiFID II/MiFIR, including updating and following up on previous publications. ESMA also facilitated 
agreements between NCAs for the delegation of powers or tasks.

Product governance

Requirements on product governance were introduced under MiFID II to enhance investor protection by regulating all 
stages of the life cycle of products or services in order to ensure that firms which manufacture and distribute financial 
instruments and structured deposits act in the clients’ best interests. Following a Consultation Paper issued in 2016, 
ESMA published the 2017 final report on product governance guidelines regarding the target market assessment by 
manufacturers and distributors of financial products. To ease the application of the guidelines, further practicalww 
examples were provided in the annex.

MiFID II Guidelines

In addition to the Guidelines on product governance, ESMA also issued two other sets of MiFID II Guidelines in 
2017, one on the calibration of circuit breakers and the publication of trading halts and the other on the management 
body of market operators and data reporting service providers. These guidelines represent another vital component 
ensuring the successful application of MiFID II from 3 January 2018.

ESMA published opinions on pre-trade transparency waivers

ESMA issued 239 opinions on waivers from pre-trade transparency under MiFID II to NCAs. These opinions are 
a convergence tool used in MiFID II to ensure that the pre-trade waiver framework is applied in a consistent way from 
day one of the MiFID II application. ESMA will continue processing the Opinions in 2018.

ESMA published first Opinions on commodity derivative position limits

One of the key new features of MiFID II is the introduction of limits to the positions market participants may hold in 
commodity derivative contracts, subject to some exemptions. Whereas a default automatic limit applies to illiquid 
contracts, NCAs are responsible for setting bespoke limits for liquid contracts.

ESMA published a first set of 13 opinions on the bespoke position limits notified by the relevant NCAs. The purpose 
of ESMA’s opinions is to ensure that the limits set comply with the defined methodology and are consistent with the 
objectives of preventing market abuse and supporting orderly pricing and settlement conditions. ESMA’s opinions 
on position limits also contribute to supervisory convergence by ensuring that consistent limits are applied to similar 
contracts based on the same underlying.

Assessing the position limits notified was new territory for ESMA, which has been working in close co-operation with 
NCAs to produce this first set of opinions on agricultural, metal and oil derivative contracts.

Transitional transparency calculations

A substantial share of activities has been concentrated on ensuring a smooth transition between MiFID and MiFID II. 
This transition was associated with an enlarged scope of responsibilities for ESMA, both directly coming from the 
legislation or after delegation by NCAs. In that respect, in 2017 ESMA computed and published the transitional 
transparency calculations that have been applicable since 3 January 2018. In addition, ESMA already planned and 
has started to manage the new data coming through the dedicated data systems in 2018, as the supporting IT system 
became available and public during 2017.

Collecting data on transaction reporting

MiFID II and MiFIR increase the scope of regulatory requirements on reporting entities in the areas of reference data, 
transparency, double volume cap and transaction reporting. In order to ensure a smooth transition from the current 
reporting regimes under MiFID I, ESMA began data collection in 2017, before the 3 January 2018 date of application 
of MiFID II and MiFIR. In order to assist market participants with the new reporting requirements, ESMA released 
technical requirements and templates providing further helpful details about the relevant reporting requirements.

18 

|  ESMA’s achievements against its 2017 objectives 

Peer reviews to assess compliance and convergence levels in the EU

ESMA’s role includes continued assessment of the levels of compliance by NCAs with the rules and guidance in force 
as well as seeking information on the levels of supervisory convergence among NCAs in the EU. One of the tools to 
carry out this work is a peer review carried out by an assessment group made up of NCA and ESMA experts.

Guidelines on the enforcement of financial information

In July 2017 ESMA published a peer review report related to some of the Guidelines on the enforcement of financial 
information.9

The report identifies areas where further supervisory convergence is deemed necessary and makes 
recommendations to support these improvements.

While ESMA acknowledges the high level of convergence in the supervision and enforcement of individual cases, the 
report identifies that improvements are needed in relation to:

•  how issuers are selected to examine their financial information;

•  the depth of inquiries into financial statements going beyond correcting disclosure; and

•  the financial and human resources allocated by NCAs to the enforcement of financial information.

In particular, five of the jurisdictions — Malta, Portugal, Romania, Sweden and the UK —were found to not fully 
comply with all of the Guidelines under review. In some jurisdictions there is a risk that insufficient resources are 
allocated to enforcement, and that some issuers are not eligible to be selected for scrutiny. Additionally, in some 
jurisdictions there is a tendency to focus on disclosure issues instead of in-depth inquiries into valuation issues.

Guidelines on certain aspects of the compliance function under MiFID

The Guidelines cover NCAs’ supervision of investment firms’ compliance functions, particularly how those functions 
carry out risk assessments, monitor compliance obligations, report to senior management and fulfil their advisory role. 
The work involved assessing the approaches of 31 European Economic Area (EEA) NCAs to supervising investment 
firms’ compliance functions against the Guidelines’ requirements

The Peer Review10 concluded that there is a high level of compliance by the majority of EEA NCAs with the Guidelines, 
although significant weaknesses were identified in the supervisory approaches of Cyprus, Iceland and the Netherlands. 
ESMA will follow up regarding the points of insufficient compliance and partial compliance with the relevant NCAs.

In addition, the Review identified a number of good practices by a number of NCAs in their supervision, including:

•  the pre-screening by NCAs of compliance officers;

•  clear communications by NCAs of expectations to the compliance function at the authorisation stage; and

•  NCAs undertaking on-site visits shortly after the firm’s authorisation, in particular for riskier firms.

Follow-up to the peer review on MiFID conduct of business rules relating to fair, clear and straightforward 
information

ESMA’s Chair sent a number of follow-up letters to NCAs where deficiencies had been identified in the previous peer 
review. The assessment concluded that six out of the ten NCAs which were found to be not fully applying certain 
commonly identified ESMA good practices have addressed all deficiencies identified. For the remaining four NCAs, 
one (Denmark, Estonia and Greece) or more (Cyprus) deficiencies remain, although significant efforts have been 
made by Cyprus and Greece.

9  ESMA42-111-4138 Peer Review on Guidelines on Enforcement on Financial Information 
10  ESMA42-111-4285 Peer review on certain aspects of the compliance function under MiFID I

ESMA’s achievements against its 2017 objectives  

|  19

Central counterparties

ESMA conducted a peer review covering the supervision by NCAs of CCPs default management procedures (DMPs), 
including simulation exercises assuming the default of a clearing member (fire drills). Overall, ESMA found that NCAs 
supervise DMPs adequately and that most EU CCPs have performed fire drills. However, the published report11 on 
the peer review highlighted areas where divergences emerged in NCAs’ supervisory approaches related to reviewing 
and testing of DMPs and fire drills. The report also identified areas where supervisory convergence could be further 
enhanced, and highlighted existing good practices. A possible case of non-compliance with EMIR was also identified with 
respect to the frequency of the comprehensive review of DMPs and fire drills, which will require further follow-up in 2018.

Supervisory convergence work related to Brexit

Following the vote of the UK on withdrawing from the EU on 23 June 2016, it notified the European Council on 
29 March 2017 of its intention to withdraw from the EU. In this context, given the prominent role of the UK in the EU 
single market, ESMA has worked to ensure a consistent supervisory approach to safeguard investor protection, the 
orderly functioning of financial markets and financial stability.

In 2017 ESMA, against this backdrop, published four opinions in order to supplement the legislative and regulatory 
framework and set up a network in order to provide a forum for reporting and discussion among NCAs regarding 
market participants seeking to relocate entities, activities or functions to the EU27, with the objective of promoting 
consistency in the decision-making of NCAs.

ESMA Opinions

ESMA published four Brexit-related opinions in 2017: one general opinion and three sectoral opinions addressed 
to NCAs. They address regulatory and supervisory arbitrage risks that arise as a result of increased requests from 
financial market participants seeking to relocate to the EU27. Without prejudice to any specific arrangements that 
may be reached between the UK and the EU, the opinions assumed that the UK would become a third country after 
its withdrawal from the EU.

The general opinion12 was published on 31 May 2017 and contained nine general principles to support supervisory 
convergence in the context of the UK withdrawing from the European Union.

The sectoral opinions were published on 13 July and were related to areas of investment firms13, secondary markets14 
and investment management15. They supplement the principles set out in the cross-sectoral opinion by addressing 
regulatory and supervisory risks in their respective areas.

Supervisory Coordination Network

In order to provide an appropriate supervisory framework for market participants seeking to relocate activities or 
functions into the EU27, ESMA has established a Supervisory Coordination Network (SCN).

The SCN aims at ensuring a high level of consistency in supervision and at protecting the integrity of the EU single 
market. Composed of senior technical experts, it facilitates supervisory coordination between the EU27, with the 
objective of enhancing mutual understanding between the EU27 NCAs through information exchange, sharing of 
good practices and in-depth discussion of key issues arising from relocation.

In six meetings in 2017, the SCN focused on different themes arising from authorisation requests or requests for 
extension of existing authorisations of investment firms, asset managers and trading venues seeking to relocate from 
the UK, in particular as regards outsourcing or delegation arrangements.

11  ESMA70-151-812 2017 CCP Peer Review Report
12  ESMA42-110-433 General principles to support supervisory convergence in the context of the UK withdrawing from the EU.
13  ESMA35-43-762 Opinion to support supervisory convergence in the area of investment firms in the context of the United 
Kingdom withdrawing from the European Union 

14  ESMA70-154-270 Opinion to support supervisory convergence in the area of secondary markets in the context of the United 
Kingdom withdrawing from the European Union 

15  ESMA34-45-344 Opinion to support supervisory convergence in the area of investment management in the context of the 
United Kingdom withdrawing from the European Union 

20 

|  ESMA’s achievements against its 2017 objectives 

2.1.1. Corporate finance

Objective 
for 2017

Achieve measurable improvements 
in the level of convergence 
regarding the application by NCAs 
of the EU legislation on corporate 
finance matters, with a particular 
focus on the development and 
application of practices in the 
prospectus and transparency 
areas and greater exchange of 
experience in the areas of corporate 
governance and takeover bids.

Prospectuses

ESMA  published  its  annual  report  on  the  number  of 
prospectuses approved and passported by the NCAs 
of the EEA within the EU prospectus regime in 2016. 
ESMA found that the number of prospectus approvals 
across the EEA fell by around 8.5% from 2015 to 2016, 
continuing  the  overall  decreasing  trend  seen  since 

the start of the financial crisis. The purpose of making 
prospectus  data  available  is  to  provide  information 
about trends within the prospectus regime in terms of 
general  approval  and  passporting  activity  as  well  as 
the structure of approved prospectuses and the types 
of securities they cover.

Transparency

The Transparency Directive (TD) requires investors to 
notify issuers when they acquire or dispose of shares 
admitted to trading on regulated markets, resulting in 
their total voting rights crossing certain set thresholds. 
As a minimum harmonisation directive, the TD allows 
EEA countries some discretion as to how they transpose 
the rules into national law. To help market participants 
identify their notification obligations under national law 
in accordance with the TD, ESMA published a practical 
guide to national rules on major holdings notifications 
across the EEA.

ESMA’s achievements against its 2017 objectives  

|  21

212 Corporate reporting

213 Investment management

Objective 
for 2017

Increase supervisory convergence 
in the area of the enforcement of 
accounting standards in particular 
by completing the peer review of 
Guidelines on the enforcement of 
financial information, and increase 
co-operation between accounting 
and auditing enforcers.

The work on the peer review report of the Guidelines 
on the enforcement of financial information is reported 
above in the Key deliveries and successes section.

ESMA published its annual report on the enforcement 
and  regulatory  activities  of  accounting  enforcers 
within  the  European  Union  in  2016.  It  also  published 
enforcement  decisions  to  inform  market  participants 
about which accounting treatments European national 
enforcers  consider  as  complying  with  International 
Financial Reporting Standards (IFRS). Understanding 
the decisions and the rationale behind them contributes 
to  a  consistent  application  of  IFRS  in  the  EEA. 
ESMA also issued a statement of European common 
enforcement  priorities 
for  2017  annual  financial 
reports,  underlining  that  listed  issuers  must  focus  on 
the new IFRS standards and the necessary transition 
disclosures.

ESMA  also  published  a  fact-finding  exercise  on 
disclosure  of  the  impact  of  the  new  accounting 
standards (IFRS 9 Financial Instruments and IFRS 15 
Revenue from Contracts with Customers) in the 2016 
annual  and  2017  interim  IFRS  financial  statements, 
with the objective of assessing the level of transparency 
and  effectiveness  of  disclosure  on  the  impact  of  the 
implementation of the new standards.

ESMA  contributed  to  the  post-implementation  review 
on IFRS 13 carried out by the International Accounting 
Standards  Board  by  conducting  a  desktop  review  of 
a sample of 2015 annual reports and of evidence from 
enforcement  actions  taken.  The  financial  statements 
in  the  sample  generally  incorporated  the  IFRS  13 
requirements  well,  but  compliance  and  comparability 
could  still  be  improved  and  the  accounting  standard 
itself could be clarified in selected areas.

Objective 
for 2017

Achieve measurable improvements 
in the level of convergence 
regarding the application by NCAs 
of the EU legislation on investment 
management.

ESMA continued to seek improvements in convergence 
on  investment  management  legislation  in  2017,  in 
particular by publishing two opinions. The first opinion 
concerned the extent to which different types of units 
or shares (share classes) of the same UCITS fund can 
differ  from  one  another.  The  opinion,  addressed  to 
national  regulators,  sets  out  four  high-level  principles 
that UCITS must follow when setting up different share 
classes  in  order  to  ensure  a  harmonised  approach 
across the EU. The second opinion sets out suggestions 
to  the  EU  institutions  for  possible  clarifications  of  the 
legislative provisions under the Alternative Investment 
Fund  Managers  Directive  (AIFMD)  and  the  UCITS 
Directive  relating  to  asset  segregation  requirements 
and  the  application  of  depositary  delegation  rules  to 
central securities depositaries.

Moreover, ESMA published several Q&As to promote 
common  supervisory  approaches  and  practices  in 
the  application  of  the  AIFMD  and  UCITS  Directive 
and  their  implementing  measures.  These  concerned, 
inter  alia,  the  AIFMD  remuneration-related  disclosure 
requirements,  the  AIFMD  marketing  requirements, 
the  AIFMD  and  the  Securities  Financing  Transaction 
Regulation (SFTR) reporting requirements, the UCITS 
issuer  concentration  limits,  the  notification  of  the 
provision of services relating to the UCITS management 
company  passport,  the  application  to  UCITS  of  the 
exemption for intra-group transactions under EMIR and 
the UCITS requirements relating to the independence 
of management boards and supervisory functions.

214 Investor protection and 
intermediaries

Objective 
for 2017

Promote the consistent application 
of MiFID and MiFID II (and their 
respective implementing measures) 
and MiFIR (collectively known as 
the ‘MiFID framework’) and co-
ordination between NCAs in the 
area of investor protection and 
intermediaries’ regulation.

Most of the work undertaken to protect investors under 
MiFID  is  reported  above  in  the  Key  deliveries  and 

22 

|  ESMA’s achievements against its 2017 objectives 

successes section. It includes supervisory convergence 
work through the adoption of Guidelines and Q&As on 
various topics in order to provide necessary guidance 
to  market  participants  and  to  facilitate  a  successful 
start into the MiFID II/MiFIR regime as well as to work 
to address risks to investor protection arising from the 
sale of CFDs and binary options to retail clients. A peer 
review and follow-up work on a previous peer review on 
investor protection and intermediaries is also included.

the  main  power  of  the  NCAs  and  colleges  under  the 
BMR,  and  the  publication  of  ESMA’s  methodological 
framework  ensures  that  this  crucial  power  is  applied 
consistently throughout the Union.

To provide market participants with further clarification 
on the most relevant issues that will affect them when 
applying  the  BMR  for  the  first  time,  ESMA  published 
a set of ten Q&As prior to the BMR applicability starting 
date of 1 January 2018.

Management body members and key function 
holders

Working with the EBA, ESMA published joint guidelines 
to  assess  the  suitability  of  members  of  management 
bodies  and  key  function  holders.  The  guidelines  aim 
to  harmonise  and  improve  suitability  assessments 
within  the  EU  financial  sectors  and  to  ensure  sound 
governance  arrangements  in  financial  institutions  in 
line  with  the  Capital  Requirements  Directive  (CRD 
IV)  and  MiFID  II.  When  appointing  members  of  the 
management body, institutions should ensure that the 
members have the reputation, knowledge, experience 
and skills necessary to safeguard proper and prudent 
management of the institution.

215 Market integrity

Objective 
for 2017

Provide guidance to market 
participants and NCAs on the 
application of the Markets in 
Financial Instruments Regulation 
(MiFIR), Market Abuse Regulation 
(MAR), Short Selling Regulation 
(SSR) Benchmarks Regulation 
(BMR) and on the Securities 
Financing Transactions Regulation 
(SFTR).

Benchmarks Regulation: critical benchmarks 
and L3 measures

In  June  2017  the  Euro  OverNight  Index  Average 
(EONIA) was added to the list of critical benchmarks, 
which  already  included  Euribor.  In  the  same  month, 
ESMA  published  a  methodological  framework  to 
assist  NCAs  and  colleges  of  critical  benchmarks 
in  using  the  power  of  mandatory  contribution.  The 
framework,  which  applies  to  all  Interbank  Offered 
Rates (IBORs) and to EONIA, provides criteria for the 
selection  of  supervised  entities  to  be  compelled  to 
contribute input data to a critical benchmark when the 
representativeness of such a benchmark becomes at 
risk.  Mandatory  contribution  to  critical  benchmarks  is 

Market Abuse Regulation implementation

MAR  provides  for  an  exemption  from  the  general 
prohibition of market manipulation for activities carried 
out  for  legitimate  reasons  and  in  accordance  with 
a  market  practice  accepted  by  a  competent  authority 
(AMP). MAR describes the non-exhaustive factors that 
a competent authority should take into account before 
deciding  whether  to  establish  an  AMP,  and  requires 
ESMA to issue a prior opinion on the proposed AMP. 
With  a  view  to  ensuring  a  more  uniform  application 
of  the  MAR  regime  across  the  EU,  ESMA  published 
points  for  convergence16  setting  out  conditions  and 
limits  that  competent  authorities  should  take  into 
account when establishing AMPs on liquidity contracts. 
ESMA then issued a positive opinion in relation to the 
AMP  on  liquidity  contracts  notified  by  the  Comissão 
do  Mercado  de  Valores  Mobiliários  (CMVM),  the 
Portuguese securities markets regulator17.

ESMA  also  published  several  Q&As  to  promote 
common supervisory approaches and practices in the 
application of MAR and its implementing measures on, 
among others, the disclosure of inside information, the 
managers’  transactions  regime,  the  market  sounding 
regime and the scope of the insider list requirements.

Short Selling Regulation

Under the SSR, ESMA published an opinion agreeing to 
a restrictive measure proposed by the Comisión Nacional 
del Mercado de Valores (CNMV), the Spanish securities 
markets regulator, in relation to a Spanish bank18. This 
long-term  ban  temporarily  prohibited  any  transactions 
resulting  in  new  net  short  positions  or  in  increasing 
existing ones in the bank’s shares. This net short position 
ban lasted for one month and was renewed twice before 

16  ESMA70-145-76 Points for convergence in relation to MAR 
accepted market practices on liquidity contracts 

17  ESMA70-145-171 Opinion on the intended accepted market 
practice on liquidity contracts notified by the CMVM

18  ESMA70-146-10 Opinion on the CNMV emergency measure 
under the Short Selling Regulation

ESMA’s achievements against its 2017 objectives  

|  23

being lifted by the CNMV in November 2017. For each 
renewal, ESMA issued a positive opinion.19

216 Post-trading

Objectives  
for 2017

Provide guidance to market 
participants and NCAs on the 
application of the European 
Market Infrastructure Regulation 
(EMIR) and Central Securities 
Depositories Regulation (CSDR).

Contribute to financial stability 
through enhanced resilience of 
European Central counterparties 
(CCPs). Enhance the consistent 
application of EMIR and the 
convergence of supervisory 
practices by active participation 
in CCP colleges, by conducting 
peer reviews and by initiating, 
co-ordinating and conducting EU-
wide stress tests for CCPs.

ESMA has the direct responsibility to participate in all 
colleges  of  EU  CCPs.  As  a  member  of  the  colleges 
of  CCPs  established  in  the  EU,  ESMA  fulfils  a  co-
ordination  role  between  competent  authorities  and 
across  colleges  in  order  to  facilitate  the  consistent 
and  correct  application  of  the  EMIR,  with  a  view  to 
building a common supervisory culture and consistent 
supervisory  practices,  ensuring  uniform  procedures 
and  consistent  approaches,  and  strengthening 
consistency in supervisory outcomes.

19  ESMA70-146-13 Opinion on CNMV renewal of emergency 
measure under Short Selling Regulation
ESMA70-146-15 Opinion on CNMV short selling ban on Liberbank

Central Counterparties

issued  an  opinion  regarding 

In  addition  to  the  peer  review  on  the  supervision  by 
NCAs  of  CCPs’  default  management  procedures 
reported  above  in  the  Key  deliveries  and  successes 
section,  ESMA 
the 
implementation of portfolio margining requirements for 
CCPs under EMIR. The opinion helps ensure consistent 
implementation of the requirements in the CCPs portfolio 
margining practices, i.e. how CCPs provide for margin 
offsets when margining together a range of instruments 
that are significantly and reliably correlated.

Furthermore,  it  is  important  to  note  that  ESMA  also 
conducted a series of follow-ups to maximise the benefits 
of  these  supervisory  convergence  exercises  and  to 
make  the  most  out  of  their  findings.  Notably,  following 
the  previous  peer  review  report,  ESMA  conducted 
a  survey  of  competent  authorities  to  identify  the  take-
up  of  the  recommended  best  practices,  developed 
Q&As where the report had identified topics for which 
further  guidance  could  be  beneficial,  and  identified 
a co-ordinated focus area that NCAs could consider in 
their  supervisory  plans.  A  survey  was  also  conducted 
amongst  competent  authorities  to  demonstrate  the 
adoption  by  CCPs  of  the  guidance  developed  in  the 
opinion on portfolio margining following its publication.

EU-wide CCP systemic risk stress test

Safe  CCPs  are  one  of  the  bedrocks  of  derivative 
reforms. To that effect, in the EU, EMIR details the high 
standards and the conditions CCPs need to meet to be 
authorised or recognised to offer services.

The first EU-wide stress test exercise on CCPs in 2016 
showed  that  EU  CCPs  were  overall  well  equipped  to 

24 

|  ESMA’s achievements against its 2017 objectives 

face  the  counterparty  risk  associated  with  the  stress 
scenarios.  Building  on  this,  ESMA  made  changes  to 
the  methodology  and  launched  the  second  EU-wide 
stress test exercise on CCPs in 2017.

The  refined  methodology  included  a  number  of  key 
changes, adding a liquidity stress test and strengthening 
the  validation  process  in  order  to  increase  the  data 
quality  assurance.  The  ESRB  provided  the  three 
market stress scenarios and CCPs were provided with 
detailed instructions on how to translate the common 
shocks for their own portfolios.

ESMA  reconciled  part  of  the  results  with  each  CCP 
via  the  relevant  NCA  in  an  effort  to  reconfirm  their 
robustness.  The  EU-wide  CCP  Stress  Test  Report20 
was published in early 2018.

Central Securities Depositories Regulation 
(CSDR)

The  CSD  authorisation  procedure  was  launched  in 
September  2017.  ESMA  organised  a  seminar  for  the 
authorities on the authorisation procedure in July 2017, 
published a series of Q&As on CSDR, and developed 
and published five sets of guidelines on access to the 
trading  feeds,  on  determining  the  authorities  to  be 
involved in the authorisation and supervision of CSDs, 
and on close co-operation between authorities.

In  co-operation  with  the  Eurosystem,  ESMA  also 
co-ordinated  the  NCAs  supervising  CSDs  settling 
securities  transactions  on  the  TARGET  2-Securities 
(T2S)  platform, 
for 
securities settlement in central bank money.

the  pan-European  platform 

Portability of data between trade repositories

ESMA issued final guidelines on data transfer between 
TRs authorised under EMIR. There are currently eight 
authorised TRs operating in the European Union and 
data portability is essential for data quality, competition 
between TRs and risk monitoring by authorities.

217 Secondary markets

Objective 
for 2017

Providing guidance to market 
participants and NCAs on the 
application of the MiFID II/MiFIR 
framework.

20  ESMA70-151-1154 EU-wide CCP Stress Test 2017 

Most of the work undertaken in the area of secondary 
markets to contribute to the successful implementation 
of the MiFID II and MiFIR regime ahead of its 3 January 
2018  launch  is  reported  above  in  the  Key  deliveries 
and successes section.

MiFID II/MiFIR Q&As

in 

II/MiFIR 

to  promote  convergence 

In  2017  ESMA  continued  to  issue  guidance  under 
MiFID 
the 
application of the rules across the EU, in particular in 
the form of Q&As. Following the receipt of a significant 
number  of  questions 
from  stakeholders,  ESMA 
has  notably  issued  guidance  on  issues  related  to 
transparency (such as the trading obligation for shares 
and the quoting obligations for systematic internalisers), 
market  structure  (such  as  the  concept  of  organised 
trading  facilities  and  direct  electronic  access)  and 
commodity derivatives (such as on the implementation 
of  position  limits  and  position  reporting  and  on  the 
ancillary activity exemption). These Q&As were of high 
importance  for  providing  market  participants  with  the 
necessary  guidance  and  for  ensuring  a  successful 
start into the MiFID II/MiFIR regime.

Additional steps contributing to the smooth 
implementation of MiFID II/MiFIR

ESMA  published  information  on  the  different  national 
implementations of the supplementary deferral regime 
for  non-equity  instruments  on  its  website.  To  further 
assist  market  participants  with  the  implementation  of 
the  MiFID  II  position  limit  framework,  on  its  website 
ESMA  also  published,  as  early  as  mid-2017,  a  list  of 
liquid commodity derivatives identified as such by the 
relevant NCAs that would receive bespoke limits. ESMA 
also undertook all the preparatory work to ensure that 
the weekly commitment of trader reports and position 
management controls by trading venues were available 
on its website by the time of the MiFID II application.

218 Horizontal supervisory 
convergence work

Enforcement Network

An  Enforcement  Network  was  created  in  2017  to 
provide enforcement officers at the national securities 
markets  regulators  with  an  opportunity  to  exchange 
experiences,  information  and  good  practices,  as  well 
as  to  identify  barriers  to  convergent  enforcement 
approaches.  Information  is  shared  on  investigative 

ESMA’s achievements against its 2017 objectives  

|  25

techniques and approaches to investigations, changes 
in  technology  and  its  impact  on  enforcement  work 
across  the  Union,  and  issues  related  to  sanctioning, 
among others.

Complaint investigation

In  2017,  ESMA  received  over  400  complaints  about 
NCAs’ potential violations of EU acts. A large number 
of complaints were inadmissible, but it was interesting 
to  note  an  increasing  trend  in  complaints  related  to 
fraud schemes (i.e. binary options).

Of  the  admissible  complaints,  a  large  part  of  them 
concerned an NCA that purportedly failed to supervise 
an  investment  firm  offering  CFDs  and  binary  options 
throughout the Union. After an in-depth assessment of 
all  the  complaints  received  in  relation  to  this  matter, 
ESMA’s  Chair  recommended  not  to  open  a  formal 
breach of Union law investigation because significant 
supervisory  work  and  regulatory  actions  had  already 
been taken by the concerned NCA.

As  for  the  own  initiative  cases,  on  6  December  2017 
ESMA’s Chair decided to initiate a breach of Union law 
investigation concerning the policy of the CSSF to allow 
UCITS  to  invest  in  certain  undertakings  for  collective 
investment (UCIs) that did not comply with the eligibility 
requirements  set  out  by  the  UCITS  Directive21.As 
a  result  of  the  investigation,  the  CSSF  decided  to 
change  its  policy22  in  a  manner  that  fully  addressed 
ESMA’s  concerns  and,  therefore,  the  investigation 
was  closed  without  the  need  for  ESMA’s  Board  of 
Supervisors 
formal  recommendation. 
The  changes  took  effect  immediately  and  no  new 
investments  in  the  concerned  UCIs  were  allowed; 
UCITS which had invested in the relevant UCIs under 
the  old  CSSF’s  policy  had  to  disinvest  from  these 
UCIs as soon as possible, taking into account the best 
interests of the investors.

to  adopt  a 

21  Directive 2009/65/EC of the European Parliament and of the 
Council of 13 July 2009 on the coordination of laws, regulations 
and administrative provisions relating to undertakings for collective 
investment in transferable securities.

Compliance with guidelines by NCAs in 2017

In  2017,  ESMA  published  nine  compliance  tables23 
the  compliance  reported  by  NCAs  on 
showing 
Guidelines  issued  by  ESMA.  76%  of  the  notifications 
reported  compliance  by  NCAs  with  the  Guidelines  in 
question  and  24%  indicated  an  intention  to  comply. 
Intentions to comply indicate that the relevant national 
measures are in the process of being incorporated into 
the  national  legal  framework  to  ensure  compliance. 
ESMA  follows  up  with  NCAs  periodically  in  respect 
of  these  intentions  to  comply  in  order  to  update  their 
compliance status.

In only one case (out of the new 274 NCA notifications 
of  2017)  did  an  NCA  indicate  that  it  was  not  in 
compliance with the relevant Guidelines; this was the 
Danish authority in relation to the Guidelines on sound 
remuneration  policies  under  the  UCITS  Directive. 
In  cases  of  non-compliance,  ESMA  publishes  the 
notification  and  the  reasons  given  by  the  NCA  in 
question  for  such  non-compliance  in  the  compliance 
table. In all cases of non-compliance, ESMA considers 
the status of the NCA and what steps should be taken to 
ensure that in the future it complies with the Guidelines 
in question.

Training provided to NCAs

In  2017,  ESMA  organised  17  training  events  for  the 
NCAs. Most of these events took place within ESMA’s 
premises  with  633  participants,  not  including  64 
speakers (who in some cases were also participants), 
coming  from  3224  European  countries.  Six  of  the 
events  focused  on  the  key  areas  of  MiFID  II  and 

23  Compliance tables:

1.  ESMA32-67-184 Compliance table for the Guidelines on 

Alternative Performance Measures

2.  ESMA34-32-316 Compliance table for the Guidelines on 

sound remuneration policies under the AIFMD

3.  ESMA34-43-352 Compliance table for the Guidelines on 
sound remuneration policies under the UCITS Directive
4.  ESMA70-145-66 Compliance table on MAR Guidelines for 

persons receiving market soundings

5.  ESMA70-145-67 Compliance table for MAR Guidelines on 

delay in the disclosure of inside information

6.  ESMA70-145-153 Compliance table for the MAR Guidelines 
on information relating to commodity derivatives markets 
or related spot markets for the purpose of the definition of 
inside information on commodity derivatives

7.  ESMA70-151-727 Compliance table on the Guidelines 

on CSD Access to the trading feeds of CCPs and trading 
venues

8.  ESMA70-151-732 Compliance table on the Guidelines on 
participant default rules and procedures under Regulation 
(EU) No 909/2014

9.  ESMA70-156-177 Compliance table on the Guidelines on 
the calibration of circuit breakers and publication of trading 
halts under MiFID II.

22  2018/PR1802 UCITS Change of Policy

24  28 EU countries, 3 EEA countries and Gibraltar

26 

|  ESMA’s achievements against its 2017 objectives 

MiFIR;  other  areas  covered  included  UCITS/AIFMD 
and CSDR.

The average number of participants per event was 37: 
similar to 2016 but significantly higher than in the 2011-
2015 period.

Regulatory IT projects

As part of its supervisory convergence activity, ESMA 
works  with  NCAs  and  other  stakeholders  to  produce 
IT  projects  that  are  mandated  by  EU  legislation.  The 
projects  below  are  at  different  stages  of  scoping, 
development and implementation.

Regulatory IT projects completed in 2017

Activity

Sub-
activity

Project

Description

Supervisory 
convergence

Secondary 
markets

Double Volume Cap

The system enables the collection and publication 
of volumes of trading across Europe per equity 
instrument, and the percentage of trading under 
certain transparency waivers.

Supervisory 
convergence

Secondary 
markets

Upgrade of the 
Transaction Reporting 
Exchange Mechanism 
(TREMM II)

Upgrade of the Transaction Reporting Exchange 
Mechanism, which included the implementation of 
new and enhanced MiFID II/MiFIR requirements for 
transaction data reporting between NCAs.

Supervisory 
convergence

Secondary 
markets

Commodity 
Derivatives - Weekly 
Position Reports (MiFID 
Art. 58)

ESMA receives weekly aggregated position reports 
from all trading venues that are trading commodity 
derivatives and emission allowances. The reports 
are published on the ESMA website.

Supervisory 
convergence

Secondary 
markets

Upgrade of the ESMA 
Register of Authorised 
and Registered Entities

Upgrade of the Authorised and Registered Entities 
Registers with new requirements stemming from 
different regulations (i.e. MiFIR, UCITS V, MAR, 
CSDR, EMIR).

Direct 
supervision

Credit rating 
agencies

Risk assessment 
framework

Study and proof of concept of a new tool supporting 
the supervisory risk assessment and analysis, 
based on data collected from supervised entities.

ESMA 
corporate

Horizontal 
services

Public Key 
Infrastructure (PKI)

Deployment of a new encryption mechanism, the 
adaptation of affected systems and rollout to the 
NCAs.

Implementation of an IT solution that collects 
data on financial instruments from trading venues 
and/or NCAs, which are stored, processed and 
published by ESMA. The IT solution also performs 
transparency calculations and the management of 
suspensions from trading.

Financial Instruments 
Reference Data System 
(FIRDS)

Access to Trace 
Repositories 
(TRACE) — Second 
phase

The system enables a single point of access for 
querying and retrieving EMIR data from TRs. The 
second phase included the implementation of ad 
hoc queries.

ESMA’s achievements against its 2017 objectives  

|  27

Delegated 
projects

Delegated 
projects

Ongoing regulatory IT projects that will continue in 2018

Activity

Sub-activity

Project

Description

Direct 
supervision

Credit rating 
Agencies

Supervisory 
convergence

Secondary 
markets

Consolidation 
of CEREP 
and RADAR 
databases

Securities 
Financing 
Transactions 
Regulation 
(SFTR)

The old ratings statistics database, CEREP, will 
consolidate with the new ratings statistics database, 
RADAR.

The first phase of the project includes the 
development of harmonised data reporting template 
for information exchange under this new regulation.

In 2018, the implementation work will commence as 
a delegated project, extending the existing TRACE 
system and enabling querying and retrieving of SFT 
data.

Supervisory 
convergence

Secondary 
markets

Commodity 
derivatives — 
Position limits 
and management 
(MiFID Art. 57)

The regulation requires NCAs to submit data of 
position limits and position management controls 
for Commodity Derivatives reporting. ESMA will 
publish and maintain on its website a database with 
summaries of those position limits.

Supervisory 
convergence

Post-trading

Central Securities 
Depositories 
Regulation 
(CSDR)

Article 7 CSDR covers the monthly reporting by 
central securities depositories to the NCAs and 
relevant authorities (central banks) regarding data 
on settlement fails.

Article 9 CSDR covers reporting by Systematic 
Internalisers to NCAs regarding data on internalised 
settlements on a quarterly basis.

Supervisory 
convergence

Secondary 
markets

Upgrade of the 
ESMA Sanctions 
Register

Upgrade of the Sanctions Register with new 
requirements stemming from different regulations 
(i.e. MiFIR, UCITS V, MAR, CSDR, EMIR).

Supervisory 
convergence

Investor 
protection and 
intermediaries

Registration 
and publication 
of third-country 
firms (MiFIR, Art. 
46)

Registration and publication of third-country firms 
allowed to provide investments services and 
activities in the European Union.

Supervisory 
convergence

Investor 
protection and 
intermediaries

Register of 
Administrators 
and Benchmarks

Establish and maintain a public Register of 
Administrators and Benchmarks, required by the 
new BMR.

28 

|  ESMA’s achievements against its 2017 objectives 

22 Assessing risks to 

investors, markets and 
financial stability

ESMA was created as part of an EU-wide response to 
a financial and economic crisis that posed risks to the 
stability of the financial system and the functioning of the 
internal market. In pursuit of this goal, ESMA continues 
to  strengthen  its  activities  in  analysing  developments, 
systemic  risks  and  structures  in  the  financial  markets 
within  its  remit.  ESMA  aims  to  continue  and  build 
its  co-operation  with  the  EU  institutions,  the  other 
ESAs,  the  European  Systemic  Risk  Board  (ESRB) 
and  international  organisations  in  this  field.  ESMA 
conducts these activities to support the risk and impact 
assessment of NCAs’ and ESMA’s regulatory activities.

Assessing  risks  to  investors,  markets  and  financial 
stability is key to identifying emerging trends, risks and 

vulnerabilities,  and,  where  possible,  opportunities, 
in  a  timely  fashion  so  that  they  can  be  acted  upon. 
ESMA  uses  its  unique  position  to  identify  market 
developments that threaten financial stability, investor 
protection  or  the  orderly  functioning  of  financial 
markets.  ESMA’s  risk  assessments  build  on  and 
complement  risk  assessments  by  the  other  ESAs 
and  by  the  NCAs  at  national  level,  and  contribute  to 
the  systemic  work  undertaken  by  the  ESRB,  which 
increasingly  focuses  on  stability  risks  in  financial 
markets. Internally, the output of the risk assessment 
function  feeds  into  ESMA’s  work  on  the  single 
rulebook,  supervisory  convergence25  and  the  direct 
supervision  of  specific  financial  entities.  Externally, 
we  promote  transparency  and  investor  protection 
by  making  information  available  to  investors  via  our 
public  registries  and  databases  and,  where  needed, 
by  issuing  warnings  to  investors.  The  risk  analysis 
function  closely  monitors  the  benefits  and  risks  of 
financial innovation in EU financial markets.

Key deliveries and successes

Initial Coin Offering statements
Early  in  the  year,  ESMA  identified  the  growing  phenomena  of  Initial  Coin  Offerings  (ICOs),  which  typically 
allowed users to exchange virtual currencies (VCs) for some form of ’token’ while employing the distributed 
ledger technology (DLT) as the mechanism of underlying exchange. The rapid growth of ICOs and attendant 
strong increase in the value of underlying VCs prompted ESMA to analyse the risks, which resulted in two 
public  statements  on  ICOs  in  November  2017.  One  statement  highlighted  the  potential  risk  to  investors  of 
investing in ICOs, while the other alerted promoters of ICOs of the existing regulations that may apply to them.

Data strategy
In 2017, the BoS approved a Data Strategy and its Implementation Plan for 2018-2022. The strategy and 
the plan envisage a more intense and efficient use of data for core activities, by both ESMA and the NCAs, 
and takes into account all stakeholders in the process.

The Strategy is comprehensive and plans different actions that need to be taken concurrently to ensure 
effective  implementation.  The  main  areas  are  concentrated  in  the  governance  of  data  activities,  the 
standardisation of the regulated data and the technical implementation to allow less costly use of the data, 
including the use of the most modern techniques (e.g. big data solutions).

221 Data and statistics

EMIR

Objective 
for 2017

Enhanced, centralised data 
management and statistical 
analysis.

ESMA is committed to enlarging the scope of its data 
management and analysis activities to support all of its 
activities. These additional efforts and outcomes were 
backed by the increase in the data available to ESMA, 
the dedicated human resources and the infrastructure.

ESMA  increased  the  depth  of  EMIR  data  analysis  in 
order  to  support  risk  assessment  analysis.  This  work 
stream,  different  from  the  one  dedicated  to  the  direct 
supervision  of  TRs,  supported  the  publication  of 
statistical information on derivatives markets by ESMA 
and provided assistance for the single rulebook activity 

25  This includes supporting ESMA’s work on the stress testing of 
CCPs.

ESMA’s achievements against its 2017 objectives  

|  29

by  contributing  to  the  guidelines  for  TRs  to  calculate 
aggregate positions by counterparties. In the derivatives 
area, ESMA also computed and published estimates of 
trading activities in commodity derivatives relevant for 
the determination of ancillary activities under MiFID II.

Single rulebook, supervisory convergence 
and direct supervision

In  addition,  data  analysis  in  ESMA  supported  the 
review  process  of  the  short  selling  regulation  and 
made  significant  contributions  to  the  new  regulations 
governing data provisions in the area of money market 
funds, prospectus and securities financing transactions.

The direct supervision of CRAs was supported by the 
production of in-depth and efficient analysis, allowing 
continuously updated access to key metrics to analyse 
the activities of these supervised entities.

Information on ESMA registers’ content was provided 
to  support  the  work  in  the  area  of  supervisory 
In  addition,  during  2017,  ESMA 
convergence. 
developed an interim register to fulfil the transparency 
requirements of the benchmark regulations.

Statistical production for regular reports and 
internal operations

ESMA continued its efforts to increase the efficiency of 
its data processing by implementing internal procedures 
for  data  handling  and 
rationalising  expenditure 
dedicated to the purchase of external data. This data 
provides important support to ESMA’s risk assessment 
activities,  which  uses  multiple  internal  and  external 
databases in order to produce the periodic reports like 
the  Trends  Risks  and  Vulnerabilities  report,  the  Risk 
Dashboard and specific research projects.

222 Financial innovation and product 
risk analysis

Objective 
for 2017

Achieve a co-ordinated approach 
to the regulation and supervisory 
treatment of new or innovative 
financial activities and provide 
advice to the EU institutions, market 
participants or consumers.

Develop a framework for the use 
of the product intervention powers 
provided by MiFIR.

The  pace  of  financial  innovation  accelerated  in  2017, 
driven  forward  by  advances  in  financial  technology 
(FinTech).  ESMA  employs  a  financial 
innovation 
scoreboard  to  analyse  and  prioritise  the  wave  of 
innovations. It serves as a proactive means of identifying 
both existing and future risks to ESMA’s objectives.

FinTech

The Commission released a consultation paper entitled 
FinTech:  a  more  competitive  and  innovative  financial 
sector.  ESMA  welcomed  the  initiative  to  conduct 
a  stocktake  of  the  EU’s  FinTech  industry.  ESMA  had 
conducted  a  survey  on  regulated  investment-based 
crowdfunding platforms in the EEA and included this in 
its response to the consultation, providing an overview 
of  current  activities  and  trends.  ESMA  stated  that  it 
sees FinTech as a positive evolution overall as long as 
business models aim at improving financial consumer 
experiences and facilitating financial inclusion.

Assessment on Distributed Ledger Technology

issued  a 

report  on  Distributed  Ledger 
ESMA 
Technology (DLT) to set out ESMA’s view on possible 
DLT applications, benefits and risks and how it maps 
to  existing  EU  regulation.  ESMA’s  position  is  that 
regulatory action is premature at this stage, considering 
that the technology is still at an early stage.

Financial Innovation Day

In February 2017 ESMA held its third Financial Innovation 
Day  for  regulators,  focusing  on  FinTech.  FinTech  is 
the  fusion  of  finance  with  technology,  and  around  20 
experts  drawn  from  both  the  industry  and  regulatory 
authorities  were  invited  to  participate  in  four  panels. 
The first panel set the scene by discussing the future of 
FinTech, with the following three panels each focusing 

30 

|  ESMA’s achievements against its 2017 objectives 

on  different  aspects  of  FinTech  that  ESMA  considers 
important  and  is  monitoring:  Artificial  Intelligence  and 
Big Data, DLT and market infrastructure, and FinTech’s 
role in improving the consumer experience.

223 Market and infrastructure risk 
analysis

Objective 
for 2017

Identify financial market risks, report 
on them to the relevant institutions 
and conduct impact assessments of 
regulations.

ESMA  monitors  market  developments  in  its  remit  in 
light  of  its  objectives  of  promoting  financial  stability, 
orderly markets and investor protection. ESMA carries 
out financial surveillance through its regular reporting 
activity to identify markets’ trends and developments, 
and assesses the main risks and vulnerabilities.

ESMA  risk  monitoring  activities  are  centred  around 
periodic  reports  to  the  EU  institutions,  which  are 
publicly  available  on  the  ESMA  webpage.  In  2017 
ESMA published two semi-annual Trends, Risks and 
Vulnerabilities  (TRV)  reports,  four  Risk  Dashboards 
and,  in  this  context,  developed  and  implemented  an 
enhanced  monitoring  of  operational  risk  in  its  remit. 
ESMA  also  contributed  to  two  Joint  Committee 
risk  reports  (see  Section  2.5.1)  and  to  the  ESRB 
shadow  banking  monitor.  ESMA  also  participates 
actively  in  risk  analysis  and  risk  monitoring  activities 
of  international  institutions,  such  as  the  ESRB, 
International Organization of Securities Commissions 
(IOSCO) and the Financial Stability Board (FSB).

Liquidity in sovereign bond markets

Measuring  the  liquidity  of  the  sovereign  bond  market 
is  of  fundamental  importance  for  market  participants 
(for 
instance  when  hedging  positions,  correctly 
pricing  other  securities,  etc.)  and  policymakers  alike. 
Episodes  of  short-term  volatility  and  liquidity  stress 
across several markets over the past few years have 
increased concerns about the worsening of secondary 
market  liquidity,  in  particular  in  the  fixed  income 
segment.  A  research  piece  in  ESMA’s  first  TRV  of 
2017  confirmed  the  deterioration  of  sovereign  bond 
market liquidity during both the financial and sovereign 
crises.  However,  the  report  also  showed  that  under 
a  supportive  monetary  policy  environment,  market 
liquidity  seems  to  have  improved  in  the  European 
sovereign bond segment.

Financial consumer complaints

The number of complaints regulators received in the first 
half  of  2017  by  financial  consumers  had  increased.  The 
three most common causes of complaints reported were on 
the execution of orders, the quality/lack of information and 
unauthorised business. One clear trend was an increase 
in the proportion of complaints relating to bonds and other 
debt  securities,  to  become  the  most  complained-about 
instrument. In contrast, complaints relating to investment 
advice had fallen markedly over recent years, which may 
be associated with measures taken by NCAs and ESMA.

Shadow banking

As part of its first TRV of 2017 ESMA provided a stocktake 
of the multi-trillion €-large market for securities financing 
transactions (SFTs) in the EU and firms’ use of collateral 
haircuts.  As  one  of  the  main  sources  of  liquidity  and 
high-quality collateral, SFTs are an essential component 
of the EU financial system. Public authorities analysing 
the  risks  in  SFT  markets  are  hampered  by  the  lack  of 
granular  data  until  the  reporting  obligation  under  the 
SFT Regulation starts. Amongst others, the SFTR aims 
at reducing financial stability risks arising from shadow 
banking activities, including SFTs.

Impact of charges on mutual fund returns

In  October  2017,  the  European  Commission  (EC) 
issued  a  mandate  to  the  ESAs  to  issue  recurrent 
reports on the cost and past performance of the main 
categories of retail investment, insurance and pension 
products.  Ahead  of  the  EC  mandate,  ESMA  had 
already  published  an  article  in  its  second  2017  TRV 
report on the impact of charges on mutual fund returns, 
which  included  a  preliminary  analysis  of  the  impact 
of  ongoing  fees,  one-off  charges  and  inflation  on  the 
returns of mutual funds. On average these reduced the 
returns available to investors by 29% of gross returns 
between  2013  and  2015.  Despite  the  impact  of  fees 
and charges on the net outcome to investors, they did 
not seem to be reflected in investor choices.

EU market in derivative contracts

For the first time, ESMA produced data on the size of 
the interest rate, credit, equity, commodity and foreign 
exchange  derivatives  markets  in  the  EU  based  on 
the  weekly  data  it  receives  from  TRs.  Based  on  the 
data  available  on  24  February  2017,  the  size  of  the 
EU’s derivatives markets across all asset classes was 
estimated  as  having  a  notional  value  of  about  €453 
trillion and around 33 million transactions.

ESMA’s achievements against its 2017 objectives  

|  31

23 Completing a single 
rulebook for EU 
financial markets

ESMA’s single rulebook work is aimed at strengthening 
regulation  and  creating  a  level  playing  field  across 
the  EU.  Working  closely  with  the  NCAs  through  its 
Standing Committees, ESMA delivers technical advice 
on legislation to the Commission, draft regulatory and 
implementing  technical  standards  and  issues  advice 
and guidelines on the application of EU law.

The  financial  crisis  exposed  the  negative  effects  that 
unevenly  applied  legislation  can  have  for  financial 
markets, its consumers and the economies at large. As 
a result, reforms were introduced to provide effective 
instruments  to  ensure  the  harmonised  application 
of  EU  law.  ESMA,  in  fostering  more  coherence 

and  consistency  in  securities  legislation  and  in  its 
application,  can  issue  regulatory  technical  standards 
(RTS)  and  implementing  technical  standards  (ITS). 
These detail and clarify Level 1 EU legislation, thereby 
ensuring a level playing field and adequate protection for 
investors. Those Technical Standards aim at upgrading 
the  quality  and  consistency  of  national  supervision, 
strengthening  oversight  of  cross-border  groups  and 
establishing  an  EU  single  rulebook  applicable  to  all 
financial market participants in the internal market.

Published  in  2016,  the  Annual  Work  Programme 
201726  outlined  the  areas  where  ESMA  intended  to 
progress  in  further  developing  and  consolidating  the 
single rulebook. In addition to producing new technical 
standards ESMA also commits every year to reviewing 
certain  technical  standards  to  ensure  that  the  Single 
Rulebook remains up to date. In 2017, ESMA reviewed 
two ITS under MiFID on position reporting; on EMIR it 
reviewed technical standards related to TR public data.

Key deliveries and successes

ESMA finalises MiFID II trading obligation for derivatives

In 2017 ESMA finalised draft legislation specifying the derivatives that should be subject to the trading obligation. The 
trading obligation for derivatives goes back to a commitment of the G20 leaders following the financial crisis requiring 
that standardised derivatives be traded on a trading venue. MiFID II/MiFIR therefore introduces the regulatory 
framework for the trading obligation for derivatives. In order for this obligation to take effect, MiFID II/MiFIR empowers 
ESMA to determine which classes of derivatives should be subject to the trading obligation and which date the trading 
obligation should take effect.

The trading obligation for derivatives is one of the key elements of MiFID II/MiFIR, which set out various criteria that 
have to be met in order to require the mandatory trading of derivatives on trading venues. Those criteria include that the 
derivative (i) is subject to the trading obligation; (ii) is traded on at least one trading venue; and (iii) is sufficiently liquid.

Following initial work in 2016, ESMA submitted to the Commission its proposal for the derivatives that should be 
subject to the trading obligation on 29 September 2017. The proposal suggested to make certain interest rate 
swaps and index credit default swaps subject to the trading obligation. However, in light of feedback provided by 
stakeholders, ESMA slightly extended the scope of these derivatives. Furthermore, the draft RTS proposed to 
introduce the trading obligation for those market participants who are already subject to the clearing obligation for 
derivatives as from 3 January 2018, i.e. the application date of MiFID II/MiFIR. For other market participants, ESMA 
suggested to introduce the trading obligation at the same time as the clearing obligation; these proposals were 
subsequently endorsed by the EU institutions.

Securitisation Regulation

In 2017, ESMA published three consultation papers on draft technical standards implementing the Securitisation 
Regulation (SR). The Regulation, which was published at the end of 2017, establishes a general framework for 
securitisation and creates a specific framework for simple, transparent and standardised (STS) securitisation.

The SR requires certain information to be reported on securitisations to repositories, including details of their 
underlying exposures, details of the securitisation structure itself, and information on securitisation cash flows. 
ESMA’s first consultation paper covered the contents and format of these disclosures as well as the operational 
standards for providing these reports to securitisation repositories and for accessing this information from 

26  ESMA/2016/1419 2017 work programme.

32 

|  ESMA’s achievements against its 2017 objectives 

securitisation repositories. Lastly, the paper sought stakeholder views on draft technical standards regarding the 
specific conditions for the entities specified in the SR to access information from securitisation repositories.

Elsewhere, the ST stipulates that securitisations seeking to be designated as STS must fulfil additional criteria and 
must notify ESMA of it. Accordingly, ESMA’s second consultation paper presented draft technical standards on the 
content and format of the notification to ESMA of a securitisation’s STS status.

Lastly, the SR enables third-party entities to seek authorisation by an NCA to assess the compliance of securitisations 
with the STS criteria. To this end, ESMA’s third consultation paper set out its proposals for technical standards on the 
application requirements for firms seeking such authorisation.

In addition to preparing final reports on these sets of technical standards, ESMA will publish further consultation 
papers in line with its mandates as set out in the SR.

Prospectus Regulation

Consultation on technical advice to the European Commission

ESMA published three Consultation Papers containing draft technical advice on the format and content of the 
prospectus, on the EU growth prospectus and on scrutiny and approval.

On the format and content of the prospectus, ESMA proposed a number of targeted alleviations in order to reduce 
the burden and costs on issuers. ESMA also developed requirements for the new Universal Registration Document 
and proposed reduced disclosure in case of secondary issuances in order to take greater account of existing publicly 
available information.

On the EU Growth prospectus ESMA’s draft technical advice included minimum disclosure requirements adapted to 
the issuers’ size and to the complexity of their operations.

The final set of draft technical advice on scrutiny and approval proposed the adoption of standard criteria for scrutiny 
of the prospectus while allowing NCAs a certain level of flexibility, which in ESMA’s view is necessary to ensure 
investor protection.

Draft technical standards

ESMA consulted on draft Regulatory Technical Standards (RTS) under the new Prospectus Regulation covering 
some key elements, namely the key financial information in the summary of the prospectus, advertisements, 
supplements, the publication of a prospectus and the data for the classification of prospectuses in the ESMA register.

Benchmarks Regulation

12 draft technical standards to ensure the integrity of EU financial benchmarks

The objective of the Benchmark Regulation (BMR), which has applied from 1 January 2018, is to improve the 
governance and control over the provision of benchmarks, thereby ensuring their reliability and protecting users. 
In March 2017 ESMA published a final report containing the draft standards under the BMR. These draft standards 
establish a common regulatory framework under which benchmarks are provided, produced and used, which will 
help to restore trust both in benchmarks and in financial markets more generally. The draft standards further specify, 
among other things, the functioning and composition of the oversight function that each benchmark administrator 
has to establish, the content of the documents that administrators have to publish in relation to the benchmarks they 
provide, and the way input data should be selected and corroborated.

Co-operation with third countries

Additionally, in June 2017 ESMA published a second final report containing draft standards on co-operation 
arrangements with third country authorities to be used under the BMR equivalence and recognition regimes.

ESMA’s achievements against its 2017 objectives  

|  33

2.3.1. Corporate finance

Objective 
for 2017

Contribute to the development of 
Level 2 measures in relation to the 
revised prospectus regime and 
evaluate the implementation of the 
amended Transparency Directive27.

Support the finalisation of the 
securitisation legislation.

with interested stakeholders. The introduction of the new 
reporting format in 2020 will make financial statements 
more  accessible  and  more  easily  comparable  for 
investors across the EU, supporting transparency and 
contributing to increased investor protection.

233 Investment management

Most of the work under the Prospectus Directive and 
the Securitisation Regulation is reported above in the 
Key deliveries and successes section.

Objective 
for 2017

Deliver high-quality technical 
standards on all obligatory 
empowerments and technical 
advice in the area of asset 
management when mandated by 
the Commission.

The  new  Prospectus  Directive  in  2017  requests 
technical  advice  from  ESMA  and  requires  it  to  draft 
RTS.  ESMA  began  this  work  in  2017  by  publishing 
three  consultation  papers  on  draft  technical  advice 
that proposed simplifications for prospectuses and by 
launching  a  consultation  on  the  draft  RTS.  The  work 
will  be  finalised  in  2018.  In  addition,  a  second  set  of 
technical  advice  addressing  an  exemption  in  case  of 
takeovers, mergers or divisions has been started.

232 Corporate reporting

ESMA  published  a  final  report  on  the  Money  Market 
Funds  Regulation  (MMFR)  containing  the  technical 
advice,  draft  ITS,  and  guidelines  on  scenarios  for 
the stress tests to be carried out by managers under 
the  regulation.  The  key  requirements  of  the  technical 
advice relate to asset liquidity and credit quality, while 
the technical standards focused on the establishment 
of  a  reporting  template.  ESMA’s  work  forms  part  of 
the  detailed  rules  required  for  the  implementation  of 
the  new  regulatory  framework  aimed  at  ensuring  the 
stability and integrity of money market funds in the EU.

Objective 
for 2017

Contribute to the set-up of high-
quality accounting standards 
through providing enforcers’ views 
on new pronouncements.

234 Investor protection and 
intermediaries

ESMA contributes actively to the accounting standard 
setting and endorsement in the EU through its observer 
role  at  EFRAG.  In  addition,  ESMA  contributes  to  the 
International  Accounting  Standards  Board  (IASB)  in 
charge  of  developing  those  global  standards.  ESMA 
continued  to  provide  comment  letters  throughout 
2017  on  a  variety  of  issues  relating  to  enforceability 
of International Financial Reporting Standards (IFRS).

Starting  from  2020,  all  issuers  should  use  the  new 
European Single Electronic Format (ESEF) to prepare 
their  annual  financial  reports.  ESMA  drafted  an  RTS 
specifying the ESEF, in which annual financial reports 
have to be prepared. In order to prepare the standard 
ESMA had held a workshop and carried out field tests 

Objective 
for 2017

Contribute to the development of 
a single rulebook in the area related 
to the provision of investment 
services (MiFID framework) by co-
ordinating with EU/EEA national 
authorities, EU institutions, EBA-
EIOPA and other international 
organisations.

ESMA has assisted the Commission in the endorsement 
process of the MiFID II RTS and ITS prepared by ESMA 
in the area of investor protection and intermediaries.

ESMA has also begun the internal preparatory work for 
the set-up of the register of third-country firms required 
by MiFIR.

27  ESMA prioritised work on the Prospectus Directive and 
the Securitisation Regulation because of their importance for 
the Capital Markets Union. The evaluation of the amended 
Transparency Directive has therefore been postponed.

34 

|  ESMA’s achievements against its 2017 objectives 

235 Market integrity

Objective 
for 2017

Contribute to orderly markets 
through having defined standards 
for benchmarks, reporting and an 
improved market abuse regime.

Market Abuse Regulation

Market abuse can take many forms and concerns different 
markets  at  the  same  time.  As  markets’  integration  is 
further increasing, smooth co-operation between NCAs 
is important in order to bear down on abusive behaviour. 
Therefore,  ESMA  published  Implementing  Technical 
Standards setting out procedures and forms for NCAs 
on  how  to  exchange  information  under  MAR  and  to 
assist each other if need be.

Short Selling Regulation

The SSR lays down a common regulatory framework 
with  regard  to  the  requirements  and  powers  relating 
to short selling and credit default swaps and ensures 
greater  co-ordination  and  consistency  between 
Member States.

In December 2016 in response to a mandate received 
by  the  Commission,  ESMA  issued  Technical  Advice 
analysing  specific  parts  of  the  SSR  and  proposing 
a  number  of  amendments  on  controversial  areas  to 
improve  its  effectiveness  and  efficiency.  The  topics 
where ESMA’s advice was sought covered three main 
areas:  the  definition  of  market-making  activities  and 
the  revision  of  the  relevant  exemption;  the  procedure 
to  impose  short-sale  bans  under  Article  23  of  the 
SSR;  and  the  notification  and  disclosure  of  net  short 
positions. After publicly consulting, ESMA submitted its 
technical advice to the Commission in December 2017.

236 Post-trading

Objective 
for 2017

Contribute to more orderly markets 
and financial stability through the 
development of post-trading-related 
technical standards.

EMIR review and sanctioning powers

In  the  context  of  the  ongoing  review  of  EMIR,  ESMA 
wrote to the Commission in January 2017 to express 
its  concern  on  a  number  of  issues  related  to  its 

supervisory  and  sanctioning  powers  under  EMIR  as 
well  as  to  highlight  certain  issues  faced  during  the 
implementation of EMIR. The letter followed up on the 
Commission’s  report  on  the  EMIR  Review,  for  which 
ESMA had submitted four reports in August 2015.

Securities Financing Transactions Regulation

Transparency  on  the  use  of  securities  financing 
transactions  (SFT)  allows  the  identification  of  risks 
associated  with  the  collateral  and  its  reuse.  In  this 
respect,  in  2017  ESMA  published  a  final  report  on 
standards  implementing  the  SFTR,  which  aims  to 
increase  the  transparency  of  securities  financing. 
ESMA’s  final  standards  provided  detailed  provisions 
on  SFT  reporting,  data  collection  and  availability, 
defined  access  levels,  registration  and  extension  of 
registration of TRs, and exchange of data on sanctions 
between  authorities.  In  addition  to  the  SFTR,  ESMA 
proposed  amendments  to  the  existing  standards 
implementing EMIR to ensure a level playing field for 
market  participants  with  regard  to  registration  and 
access rules.

Fees for trade repositories

fee 

TRs  have  to  pay  fees  for  specific  administrative 
actions, such as registration, extension of registration 
or  recognition,  and  an  annual 
for  ongoing 
supervision, which is proportionate to the level of the 
turnover  of  the  TRs.  ESMA  proposed  final  Technical 
Advice to the European Commission on fees for TRs 
under  the  SFTR.  It  also  advised  simplifying  the  way 
of determining the turnover of TRs for the purposes of 
calculating  the  annual  supervisory  fees  by  including 
revenues only and excluding activity figures.

Aggregation and publication of derivatives 
data

ESMA issued final RTS regarding the aggregation and 
publication of derivatives data by TRs. The RTS ensure 
that the market activity in derivatives traded both on and 
off venue is correctly identified and aggregated. In order 
to ensure that the end users are able to aggregate and 
compare the position data published by TRs, ESMA’s 
RTS establish general rules by defining the frequency 
and  timeliness  of  publication;  the  general  technical 
aspects of aggregation for the purposes of publication; 
and  the  details  of  aggregations  for  the  purposes  of 
benchmarks’ and commodities’ thresholds.

ESMA’s achievements against its 2017 objectives  

|  35

237 Secondary markets

Objective 
for 2017

Deliver technical standards 
specifying which classes of 
derivatives should be subject to the 
trading obligation as per Article 32 
of MiFIR.

MiFID II/MiFIR

Delivery of new RTS and amendment of an ITS

ESMA  delivered  draft  technical  standards  specifying 
the treatment of package orders and the scope of the 
consolidated  tape  for  non-equity  instruments.  The 
Commission  endorsed  both  technical  standards  in 
2018.  Furthermore,  ESMA  proposed  an  amendment 
to a draft ITS on position reporting with regard to the 
format  of  position  reports  by  investment  firms  and 
market operators.

Proposed amendment of RTS 1

In  November  2017,  ESMA 
launched  a  public 
consultation proposing an amendment to Commission 
Delegated Regulation (EU) 2017/587 (RTS 1) specifying 
the  transparency  obligations  for  equity  instruments. 
The suggested amendment aims at clarifying that the 
quotes  of  systematic  internalisers  should  reflect  the 
price  increments  applicable  to  EU  trading  venues, 
thereby  contributing  to  a  level  playing  field  between 
systematic internalisers and trading venues.

238 Credit rating agency policy

Objective 
for 2017

Continue to contribute to the 
establishment of a robust regulatory 
framework for credit rating agencies 
(CRA) in smooth co-operation with 
the supervisory activities of ESMA.

Eligibility of third-country jurisdictions for 
endorsement and equivalence

The CRA 3 Regulation (CRA 3) introduced a number of 
new requirements for EU-registered CRAs. These new 
requirements  will  enter  into  force  for  the  purposes  of 
the equivalence and endorsement regimes under the 
CRA  Regulation  on  1  June  2018.  To  ensure  it  could 
fully  reflect  these  new  provisions  in  its  equivalence 

decisions, the Commission requested ESMA to provide 
updated advice on the equivalence of all third-country 
jurisdictions  that  had  previously  been  assessed  as 
meeting  the  requirements  of  the  EU  regime.  ESMA 
provided  its  Technical  Advice  on  nine  jurisdictions  to 
the Commission on 17 November 2017.

Endorsement regime for third-country credit 
ratings

The  endorsement  regime  provided  by  the  CRA 
Regulation  allows,  under  specific  conditions,  an  EU 
CRA to assume full responsibility for (endorse) a credit 
rating issued by a third-country CRA, thereby enabling 
the use of this credit rating for regulatory purposes in the 
EU. The entry into force of CRA 3, and the associated 
introduction  of  new  requirements  to  endorsed  ratings 
in  2018,  provided  an  opportunity  for  ESMA  to  review 
its  Guidelines  on  the  application  of  the  endorsement 
regime (Guidelines on endorsement).

On 4 April, ESMA published a Consultation Paper with 
a  proposal  to  update  its  Guidelines  on  endorsement 
and, on 17 November, ESMA published the final report 
updating  them.  It  introduced  a  number  of  changes 
and  clarifications,  focusing  on  the  obligations  of  the 
endorsing  CRA,  the  conduct  of  the  third-country 
CRA  and  the  third-country  legal  and  supervisory 
framework  and  clarified  ESMA’s  supervisory  powers 
over  endorsed  credit  ratings  as  well  as  the  notion  of 
objective reasons.

Encouraging competition in the CRA market

The  CRA  Regulation  aims  to  encourage  competition 
in  the  CRA  industry,  in  particular  Article  8(c)  and  (d) 
requires  issuers  or  related  third  parties  to  consider 
appointing a smaller CRA when they intend to appoint 
two or more CRAs for the rating of an issuance or entity. 
However,  implementation  of  this  article  was  hindered 
by  a  lack  of  clarity  in  a  number  of  areas.  On  6  April 
2017, ESMA issued a supervisory briefing to national 
Sectoral  Competent  Authorities  to  assist  them  with 
their supervision and enforcement of these provisions 
and to promote supervisory convergence through the 
adoption of a common supervisory approach.

In  addition,  on  20  December  2017  ESMA  published 
a redesigned annual market share calculation in order 
to provide a better overview of the market for CRAs in 
the  EU  and  to  further  improve  the  implementation  of 
these Articles.

36 

|  ESMA’s achievements against its 2017 objectives 

24 Direct supervision 

of specific financial 
entities

is 

the  sole  supervisor 

ESMA 
for  credit  rating 
agencies (CRAs) and trade repositories (TRs) – data 
warehouses that collect, store and make available data 
on  derivatives  contracts  –  in  the  EU.  ESMA  adopts 
a  risk-based  approach  to  the  supervision  of  CRAs 
and  TRs  in  accordance  with  its  overall  objectives  of 

promoting financial stability and orderly markets and of 
enhancing investor protection. This approach requires 
the  analysis  of  information  from  a  variety  of  sources 
and  the  application  of  multiple  supervisory  tools, 
including  thematic  reviews,  regular  meetings  with 
different  functions  of  the  supervised  entities,  on-site 
inspections  and  dedicated  investigations.  ESMA  has 
a number of such tools available to it in carrying out its 
mission in this area and is committed to appropriately 
using  all  of  them  in  addressing  supervisory  issues, 
including taking enforcement action when necessary.

Key deliveries and successes

Preparation for Brexit

Currently, ESMA supervises six CRAs and five TRs established in the UK. Following ESMA’s General Opinion 
of 31 May 201728 - setting out general principles aimed at fostering consistency in authorisation, supervision and 
enforcement related to the relocation of entities, activities and functions from the UK - ESMA established a strategic 
direction for the entities falling directly under its supervisory powers. This resulted in a letter sent to UK-based CRAs 
and TRs, providing key messages and clarifications with regard to ESMA’s expectations and addressing queries 
raised by supervised entities. ESMA also requested and received CRAs’ and TRs’ contingency plans for certain 
scenarios, including the scenario where there will be: (i) no transitional arrangement between the EU27 and UK; and 
(ii) no third-country regime applicable (hard-Brexit scenario). During 2017, Brexit was a key supervisory priority for 
ESMA, whose objective in this respect is to ensure that, in case a CRA or TR intends to continue its operations in the 
EU, their set-up post-Brexit in the EU is: (i) as strong as it was pre-Brexit; (ii) proportionate to the activities performed 
in the EU27; and (iii) complies with all requirements of EMIR and the CRA Regulation. If a CRA or TR does not intend 
to maintain its EU registration post-Brexit, the contingency plan needs to include a proper withdrawal process.

Fees and ancillary services

During 2017, ESMA continued its work on the fees and ancillary services project launched in 2016 with the purpose 
of clarifying its expectations regarding the provisions relating to fees in the CRA Regulation and EMIR. ESMA 
conducted a review through analysis of information, a roundtable with supervised entities and regular engagement 
with users of credit ratings and TR services. Following the conclusion of its supervisory review, ESMA published on 
11 January 2018 a thematic report on fees charged by CRAs and TRs, setting out its concerns with transparency and 
disclosure of fees, the fee-setting process and the CRAs’ and TRs’ interaction with related entities.29

Moody’s fined €1.24m for credit ratings breaches30

During 2017, ESMA also took enforcement action, most notably by levelling a fine of €1.24m on Moody’s Investors 
Service Limited and Moody’s Deutschland GmbH for negligent infringements of the CRA Regulation. The 
infringements related to the presentation of credit ratings and the disclosure of methodologies. Regarding the former, 
the ESMA BoS found that the press releases in question (i) failed to indicate the principal methodology or version 
of methodology, (ii) failed to refer to the comprehensive description of the methodology, principal methodology or 
version of methodology used to determine each of the ratings concerned, and (iii) did not include a comprehensive 
description of the methodologies concerned. Regarding the disclosure of methodologies the ESMA BoS found 
that the methodology used with respect to the ratings in question was not the subject of any separate prior public 
disclosure either before or after the public rating announcements. Moreover, none of the press releases in respect of 
the relevant ratings made full disclosure of the methodology used in each instance.

28  ESMA42-110-433 General principles to support supervisory convergence in the context of the UK withdrawing from the EU.
29  ESMA80-196-954 Thematic report on fees charged by CRAs and TRs
30  ESMA41-137-1005 Decision of the Board of Supervisors to adopt a supervisory measure and impose fines with respect to 
infringements by Moody’s Deutschland GmbH and Moody’s Investors Service Limited.

ESMA’s achievements against its 2017 objectives  

|  37

Development of supervisory tools

ESMA developed new supervisory tools in 2017. Most of the resources were spent on tools to develop and further 
improve the risk assessment process and framework. This allows ESMA to better identify and evaluate supervisory 
risks and facilitates decision-making and the allocation of supervisory efforts in line with ESMA’s risk-based 
framework. ESMA also spent considerable resources on further improving and implementing the various credit ratings 
databases. Extensive work was done to integrate the CEREP and RADAR databases and to improve the quality of 
the data received by ESMA through its RADAR reporting system.

241 Credit rating agencies

Supervision

Objectives 
for 2017

Ensure that registered CRAs 
comply with the CRA Regulation 
and, where applicable, refer 
cases to the Independent 
Investigation Officer (IIO) where 
there are serious indications of 
potential infringements of the 
CRA Regulation.

Protect investors by ensuring that 
only registered CRAs issue credit 
ratings in the Union.

Enhance effectiveness and 
a lasting impact of supervisory 
activities at the individual CRA 
level by intensifying our risk-
based approach and by moving 
from a functional compliance/
desk-based approach to 
a business/strategy-based 
approach of supervision.

Strengthen ESMA’s reputation 
through world-leading expertise.

Supervision of credit rating agencies

Registration

Over  the  course  of  2017,  ESMA  registered  one  new 
CRA  and  one  registration  was  withdrawn,  keeping 
the  number  of  CRAs  registered  by  ESMA  stable:  26 
registered CRAs and four certified CRAs. An applicant 
from  2016  who  was  refused  by  ESMA  subsequently 
appealed  this  decision  to  the  Board  of  Appeal  of 
the  ESAs,  which  decided  to  dismiss  the  appeal  and 
confirmed ESMA’s decision refusing the registration as 
a CRA (see Section 2.5.6). The CRA industry in the EU 
remains focused around three large players. During the 
year a few smaller CRAs were able to slightly increase 
their market share and number of mandates.31

31  ESMA33-5-209 CRA Market Share Calculation 2017 

A  significant  part  of  ESMA’s  day-to-day  supervision 
is  dedicated  to  assessing  the  periodic  information  it 
receives from supervised entities, drawing up remedial 
action  plans  and  monitoring  their  application.  The 
larger  CRAs  are  global  in  nature  and,  therefore,  co-
operation  with  other  supervisory  authorities  is  an 
important  aspect  of  ESMA’s  supervision.  ESMA 
actively  participates  in  global  supervisory  colleges, 
which consist of ESMA and of the main CRA regulators 
outside the EU for the three largest and internationally 
operating CRAs. During 2017, ESMA also had bilateral 
interactions  with  regulators  from  third  countries  on 
smaller CRAs operating globally as well as on specific 
topics such as methodology disclosures and conflicts 
of interest in shareholdings.

Perimeter assessments

Entities who aim to issue credit ratings in the EU need 
to be registered with ESMA. In order to ensure a level 
playing  field  and  identify  market  participants  issuing 
credit ratings without being registered, ESMA performs 
perimeter assessments using a variety of information 
sources to identify companies that potentially provide 
credit rating activities without registration. Throughout 
from  several 
2017,  ESMA  assessed 
companies to identify whether their activities fall within 
the scope of the CRA Regulation.

information 

Quality of the rating process

The main objective of the CRA Regulation is to ensure 
that  credit  ratings  are  independent,  objective  and  of 
adequate quality. Quality of ratings was therefore the 
main  focus  of  ESMA’s  CRA  supervisory  activities 
in  2017.  ESMA  has  worked  on  numerous  areas  to 
enhance the quality of credit ratings, including portfolio 
risk, validation of methodologies and the methodology 
development  and  rating  process.  In  addition  to 
a number of dedicated investigations in these areas, 
ESMA followed up on its thematic work into validation 
practices within CRAs and analyst rotation.

38 

|  ESMA’s achievements against its 2017 objectives 

IT and internal controls

242 Trade repositories

IT  and  internal  controls  were  another  important 
topic  for  ESMA  in  2017,  driven  by  the  high  levels 
of  risk  identified  in  these  areas  in  the  2016  risk 
assessment. Improvements were seen in some of the 
IT and information security processes for a number of 
CRAs.  At  the  same  time,  ESMA  has  noted  recurring 
performance  issues  and  errors  in  the  rating  process 
due to IT internal control failures. ESMA also monitored 
the  implementation  of  a  number  of  remedial  action 
plans that were the result of investigations conducted 
in the past, some requesting significant changes to be 
made by CRAs due to the issues identified during the 
relevant investigation.

Governance and strategy of CRAs

Brexit  is  driving  some  of  the  important  strategic  and 
governance decisions that CRAs are taking in the EU. 
The organisational set-up of some of the largest CRAs 
in the EU will be impacted by the UK leaving the EU. 
In  addition,  as  set  out  in  the  2017  work  programme, 
some  CRAs  have  been  undergoing 
important 
reorganisations.  ESMA  continuously  monitors  their 
strategy  and  governance  by  assessing  the  periodic 
information submitted by CRAs to ESMA. ESMA also 
has  regular  interactions  with  senior  management  and 
(independent) board members of CRAs to understand 
and  assess  the  strategic  direction  and  governance  of 
CRAs.

Objectives 
for 2017

Enhance effectiveness and 
a lasting impact of supervisory 
activities at the individual TR level 
by intensifying our risk-based 
approach and by moving from 
a functional compliance/desk-
based approach to a business/
strategy-based approach of 
supervision.

Further enhance the availability, 
maintenance of confidentiality and 
quality of reported data to ensure 
the proper functioning of the 
EMIR framework.

New registration/extension of 
the registration under Securities 
Financing Transactions 
Regulation (SFTR).

Fostering compliance to TRs, not 
only formal compliance with the 
letter of the Regulation but also 
with the fundamental spirit of 
EMIR.

Supervision of TRs

In 2017, ESMA registered two new TRs — the first since 
the end of 2013. Overall, the six existing TRs (excluding 

ESMA’s achievements against its 2017 objectives  

|  39

the  two  approved  in  2017)  have  maintained  a  similar 
market  share  to  last  year.  Third-party  intermediaries 
also played an important role by reporting on behalf of 
an increasing number of counterparties to TRs.

By  the  end  of  2017,  the  eight  TRs  operating  in  the 
EU  had  collected  nearly  65  billion  reports  in  total. 
These reports do not only include new trades but also 
their  modifications  and  other  lifecycle  events.  During 
the  course  of  this  year,  the  level  of  reporting  activity 
has  stabilised  at  an  average  of  around  400  million 
submissions per week.

Data quality and data access

TRs play an integral role in enhancing the transparency 
of derivative markets and in reducing risks to financial 
stability  by  providing  quality  data  to  regulators  and 
researchers.  Poor-quality  data  limits  the  capabilities 
of  data  users  to  identify  and  respond  to  systemic 
counterparty and financial system risk. In 2017, ESMA 
continued  to  monitor  the  data  received  from  TRs  via 
the  monthly  data  quality  dashboards.  ESMA  initiated 
a data quality log to further increase co-operation with 
NCAs and users of EMIR data regarding data quality 
issues in 2017. The log prevents the replication of effort 
for  several  NCAs  and  other  users  of  EMIR  data  that 
may  pursue  similar  issues  with  TRs  in  parallel,  while 
also providing clarity to the data users as to why certain 
issues are getting priority. ESMA has improved overall 
TR  data  quality  by  performing  a  regular  revalidation 
of  the  data  made  available  by  TRs,  by  working  with 
TRs to improve reconciliation (average pairing rates in 
November 2017 rose to 87%, from 55% in November 
2016) and ensuring that regulators and data users can 
access the data they are entitled to via TRACE (the IT 
system developed in 2016).

Governance and strategy of TRs

ESMA continued to actively engage with TRs regarding 
strategic,  governance,  and  operational  matters  and 
preparations  for  when  the  UK  leaves  the  EU.  ESMA 
actively  engaged  with  TRs  through  on-site  visits  that 
enhanced  the  understanding  of  the  entity-specific 
governance  and  the  strategic  directions  that  TRs  are 
taking. Throughout 2017, ESMA intensified its dialogue 
with  supervised  entities  in  line  with  their  risk  profile. 
ESMA  issued  the  Guidelines  on  Portability  in  August 
201732,  which  establish  a  consistent  and  harmonised 
approach to the transfer of data between TRs, setting 

32  ESMA70-151-552 Guidelines on transfer of data between 
Trade Repositories 

the basis to allow for a competitive TR environment and 
to ensure high-quality data is available to authorities.

Adequacy of resources

Some  TRs  have  increased  their  resources  in  terms 
of staff, budget and technological solutions; however, 
the  level  of  resources  dedicated  to  the  TR  business 
remains  an  area  of  concern  for  ESMA,  particularly 
in  light  of  upcoming  regulatory  changes  such  as  the 
SFTR.  ESMA  expects  TRs  to  increase  resources 
if  they  choose  to  expand  their  business  into  new 
reporting  regimes.  In  particular,  ESMA  has  noticed 
some  persistent  concerns  regarding  the  role  of  the 
compliance function across all TRs, such as insufficient 
resources and poor empowerment. In response, ESMA 
sent a letter outlining certain principles to each TR.

In  2017,  ESMA  continued  to  regularly  monitor  the 
financial situation of the registered TRs based on the 
submitted  audited  annual  financial  statements  and 
interim  financial  statements.  The  analysis  suggests 
that TRs have sufficient buffers for at least 6 months of 
operational costs.

IT, information security and cyber security

TRs are technology-based market infrastructures and 
the  robustness  and  reliability  of  their  IT  systems  is 
therefore an important driver of their ability to perform 
their duties under EMIR. In 2017, as part of its ongoing 
TR supervision, ESMA dedicated significant attention 
to  the  TRs’  efforts  towards  achieving  smooth  and 
reliable systems operation. In addition, ESMA closely 
monitored the implementation and project governance 
aspects  of  material  changes  to  certain  TRs’  systems 
architecture aimed at better supporting the introduction 
of  the  revised  RTS  on  reporting,  the  improvement 
of  existing  data  quality  capabilities,  as  well  as  the 
achievement of cost efficiencies.

With respect to information and cyber security, ESMA 
periodically  receives  information  about  system  and 
network  penetration 
tests,  security  assessments, 
audits  and  vulnerability  assessments  performed  by 
TRs. Any relevant incident is also notified to ESMA on 
an ad hoc basis. During 2017, the information collected 
by  ESMA  and  reported  by  TRs  was  assessed  and 
potential findings were followed up for further analysis 
or appropriate remedial action.

ESMA continued to monitor the book of work that was 
introduced in 2016. The book of work is a standardised 
template sent to ESMA by each TR outlining the scope, 
timeline and progress of both ongoing and planned IT 

40 

|  ESMA’s achievements against its 2017 objectives 

projects.  ESMA  supervision  has  developed  metrics 
and indicators to monitor the evolution and trends as 
regards the number of identified new fixes, the number 
of closed, cancelled and new issues, and the average 
time  and  effort  needed  to  perform  a  fix  within  and 
across  TRs,  as  well  as  the  average  time  a  software 
ticket  remains  open  before  being  fixed.  This  tool  is 
expected  to  provide  ESMA  supervision  with  early 
warnings on delays of fixes, inappropriate prioritisation 
or resource allocation issues.

243 Third-country CCPs

Objectives 
for 2017

Co-operation with third country 
authorities for recognition of third-
country CCPs.

Usage of third-country CCPs to 
fulfil the clearing obligation.

CCPs  established  in  third  countries  (TC-CCPs)  may 
provide  clearing  services  to  clearing  members  or 
trading venues established in the EU only where that 
CCP  is  recognised  by  ESMA.  In  addition,  under  the 
Capital  Requirements  Regulation  (CRR)33,  credit 
institutions  and  investment  firms  may  only  benefit 
from preferential capital treatment with respect to their 
cleared  derivatives  transactions  exposure,  when  the 
CCP they are facing is recognised by ESMA. This has 
led 47 TC-CCPs to apply for recognition to ESMA20 (as 
of 31 December 2017).

One  of  the  conditions  to  be  fulfilled  for  a  TC-CCP  to 
be  recognised  is  the  adoption  by  the  Commission  of 
an  implementing  act  determining  that  the  legal  and 

supervisory  arrangements  of  a  third  country  ensure 
that CCPs authorised in that third country comply with 
legally  binding  requirements  which  are  equivalent  to 
the  EMIR  requirements,  the  so-called  equivalence 
decision. Another condition that needs to be respected 
is  for  ESMA  to  conclude  cooperation  arrangements 
with the relevant third-country authorities. Following the 
adoption by the Commission of equivalence decisions 
for  India,  Brazil,  New  Zealand,  Japan  Commodities 
CCPs,  United  Arab  Emirates  and  Dubai  International 
Financial Centre in December 2016, ESMA concluded 
seven memoranda of understanding34 with 10 different 
authorities35 and recognised nine additional TC-CCPs 
in March, May and September 2017. An additional US 
CCP was also recognised in March 2017.

Monitoring of Third Country-CCPs activity

Whilst ESMA does not have direct supervision powers 
over  TC-CCPs  as  such,  it  has  to  monitor  TC-CCP 
activity  as  stated  in  the  ESMA  Regulation  and  in  the 
context  of  EMIR  to  ensure  EU  financial  stability.  In 
addition,  ESMA  should  assess  whether  the  classes 
of  over-the-counter  (OTC)  derivatives  cleared  by 
recognised TC-CCPs should be subject to the clearing 
obligation. Therefore, following the recognition of a TC-
CCP,  ESMA  has  the  obligation  to  regularly  monitor 
the  range  of  activities  and  services  that  the  TC-CCP 
provides in the EU so as to be able to identify potential 
situations in which the recognition of the CCP should 
be reviewed. With regards to the equivalence decision 
related to the Commodity Futures Trading Commission 
CCP regime, ESMA also has to monitor the compliance 
of  the  relevant  CCPs  with  the  conditions  set  by  the 
Commission in the respective decision.

33  Capital Requirements Regulation (CRR) - 575/2013

34  https://www.esma.europa.eu/regulation/post-trading/central-
counterparties-ccps. 

In some jurisdictions more than one authority is responsible 

35 
for one CCP’s supervision and in some federal countries each 
province/state has its own relevant authority or multiple authorities.

ESMA’s achievements against its 2017 objectives  

|  41

25 Joint Committee

In 2017, the Joint Committee continued to be a central 
point  for  coordination  and  exchange  of  information 
between 
the  European  Supervisory  Authorities 
(ESAs)  and  with  the  European  Commission  and  the 
European  Systemic  Risk  Board.  Progress  in  the  field 
of Anti-Money Laundering (AML) and Counter-Terrorist 
Financing  (CTF)  was  in  the  spotlight  of  the  Joint 
Committee work under the EBA Chairmanship.

251 Joint Committee — Forum for 
exchange on cross-sectoral risks

The  three  ESAs  continued  their  efforts  to  identify 
potential  risks  to  consumer  protection  and  financial 
stability across the three sectors, with a view to support 
consistent approaches and clear convergent guidance 
to  supervisors  and  market  participants.  Beyond 
being a cross-sectoral forum for exchange among its 
participants,  the  Joint  Committee  started  to  look  at 
the potential risks triggered by Brexit. Here, a focus is 
on  possible  implications  on  the  provision  of  financial 
services, the continuity of contracts, and on ensuring 
consistent EU approaches to oversight of cross-border 
groups  and  activities,  including  possible  relocations. 
The  two  Joint  Committee  Risk  Reports,  published  in 
spring (JC 2017 09) and autumn (JC 2017 46), convey 
the ESAs’ preliminary analysis on this issue.

Beyond  that,  both  Joint  Committee  Risk  Reports 
discuss  the  persistent  low  profitability  of  banks  and 
insurers  in  a  low  growth  and  yield  environment, 
valuation risks with risks of a reversal of risk premia, as 
well as interconnectedness, in particular via asset price 

contagion  and  direct  financial  exposure.  The  reports 
moreover  address  challenges  arising 
from  rapid 
developments  in  information  technology,  including 
Fintech, and its impact across the three sectors.

252 Progress in the ESAs’ mandate 
in the fight against money laundering 
and terrorist financing

The  fight  against  money  laundering  and  terrorist 
financing has been a key priority for the Joint Committee 
over  the  last  year,  as  the  ESAs  sought  to  create 
a  common  understanding,  by  AML/CFT  competent 
authorities  and  credit  and  financial  institutions,  of  the 
risk-based  approach  to  AML/CFT,  and  how  it  should 
be applied.

To  this  end,  the  ESAs  published  guidance  on  ML/TF 
Risk Factors, which provide institutions with the tools 
they  need  to  make  informed,  risk-based  decisions 
on the effective management of ML/TF risk and help 
competent authorities assess whether institutions’ ML/
TF  risk  assessment  and  management  systems  and 
controls  are  adequate.  Together  with  the  Risk-based 
AML/CFT Supervision Guidelines (published in 2016) 
and  a  Joint  Opinion  on  the  ML/TF  risk  affecting  the 
internal  market  that  was  published  in  February,  the 
Risk  Factors  Guidelines  provide  a  framework  for  the 
consistent application of EU AML/CFT legislation, and 
transform  the  way  European  supervisors  and  firms 
discharge their AML/CFT functions. Consequently, the 
Commission, in its 2017 supranational risk assessment, 
recognises  the  ESAs’  pivotal  role  in  raising  the  EU’s 
capacity  to  meet  AML/CFT  challenges  across  the 
financial sector.

their  work  on 

The  ESAs  complemented 
the 
fundamental aspects of the risk-based approach with 
training  for  AML/CFT  supervisors,  and  guidance  and 
standards  on  specific  aspects  of  Europe’s  AML/CFT 
regime, including guidelines on managing ML/TF risk 
in transfers of funds that set out what payment service 
providers  should  do  to  identify  and  manage  fund 
transfers  with  incomplete  information  on  the  payer  or 
the payee; draft Regulatory Technical Standards (RTS) 
on  Central  Contact  Points  to  facilitate  the  AML/CFT 
supervision of, and AML/CFT compliance by, payment 
service  providers  and  e-  money  institutions  that  are 
established in different Member States; draft RTS on 
the  management  of  ML/TF  risk  in  situations  where 
a third country’s law prevents the application of robust 
group-wide  AML/CFT  policies  and  procedures;  and 
a  joint  opinion  on  the  use  of  innovative  solutions  for 
customer  due  diligence  (CDD)  compliance  purposes. 

42 

|  ESMA’s achievements against its 2017 objectives 

This Opinion sets out the factors competent authorities 
should  consider  when  assessing,  on  a  case-by-case 
basis, whether the use of innovative solutions for CDD 
purposes is appropriate, with a view to promoting the 
responsible use of innovation in the AML/CFT context 
in line with the ESAs’ wider work on financial innovation.

253 Protecting consumers

Consumer protection and financial innovation continue 
to figure prominently on the Joint Committee’s agenda. 
The Joint Committee continued its work on the PRIIPs 
Regulation,  with  the  three  ESAs  putting  forward 
Technical  Advice  on  PRIIPs  with  environmental  and 
social objectives (JC 2017 43), concluding that specific 
and standalone obligations for PRIIPs targeting these 
objectives  would  not  be  proportionate.  Moreover,  the 
Joint  Committee  published  three  sets  of  Q&As  on 
PRIIPs (JC 2017 49) which inform stakeholders on the 
application of rules and promote common supervisory 
approaches  and  practices  in  the  implementation  and 
supervision of the key information document (KID).

In the field of financial innovation, the Joint Committee 
continued  its  work  on  Big  Data  in  analysing  the 
potential benefits and risks for consumers and financial 
institutions linked to the use of big data analytics and 
processes. The final report will encourage the adoption 
of  good  practices  by  financial  institutions,  and  an 
accompanying consumer information sheet will inform 
consumers about the use of big data.

Work initiated in 2016 on cross-border supervision of 
financial services continued, with a view to preparing 
a general mapping of the rules for the different financial 
firms  operating  in  three  sectors  and  analysing  any 
issues experienced by supervisors.

The Joint ESAs Consumer Protection Day 2017, which 
took  place  in  Prague,  Czech  Republic,  facilitated  the 
ESAs to engage with key — and new — stakeholders, 
especially representatives of consumers, on important 
issues  faced  by  consumers  and  investors  across  the 
EU.

254 Financial conglomerates

In December 2017, the Joint Committee published its 
annual  list  of  Financial  Conglomerates  showing  the 
location of 80 financial conglomerates with the head of 
group in the EU/EEA area. In addition to that, the Joint 
Committee  started  to  work  on  reporting  templates  in 
this field and will continue doing so in 2018.

255 ESAs’ advancement in the single 
rulebook and ensuring a level playing 
field

Since  the  adoption  of  two  Implementing  Regulations 
on credit assessments by External Credit Assessment 
Institutions  (ECAIs)  based  on  the  draft  Implementing 
Technical  Standards  (ITS)  submitted  by  the  Joint 
Committee,  five  additional  ECAIs  have  been 
recognised  and  one  ECAI  has  been  deregistered. 
The  Joint  Committee  has  updated  the  Implementing 
Regulations to reflect these changes.

In  addition,  the  ESAs  submitted  draft  amendments 
to  the  RTS  on  risk  mitigation  techniques  for  OTC 
derivatives not cleared by a CCP under EMIR to align 
the treatment of a variation margin for physically settled 
FX forwards with the supervisory guidance applicable 
in  other  key  jurisdictions  after  being  made  aware  of 
certain  challenges.  The  amendments  reiterate  the 
commitment  to  apply  the  international  standards  and 
require the exchange of variation margin for physically 
settled FX forwards in a risk-based and proportionate 
manner.

256 Board of Appeal

to  provide  operational  and 
The  ESAs  continued 
secretarial  support  to  the  Board  of  Appeal.  In  2017, 
there  was  one  appeal  case  brought  by  FinancialCraft 
Analytics  Sp.  Z  o.o.  against  a  registration  decision  by 
ESMA. The Board of Appeal unanimously dismissed the 
appeal in July 2017, thereby confirming ESMA’s decision 
of  8  December  2016  refusing  FinancialCraft  Analytics 
Sp. z o.o.’s registration as a credit rating agency.

ESMA’s achievements against its 2017 objectives  

|  43

26 ESMA as an organisation

261 Governance services

2611  Corporate affairs

Objective 
for 2017

Ensure compliance with 
standards, support the 
organisation’s governance, 
manage stakeholder relations 
and internal and external 
communications activities.

ESMA engages with many European and international 
stakeholders, adopting a high level of transparency. On 
17 October 2017 ESMA hosted its first conference ‘The 
State of European Financial Markets’ in which political 
decision-makers,  global  regulators  and  high-profile 
stakeholders  gathered  to  discuss  the  current  state  of 
EU financial markets.

European Union institutions

ESMA  maintains  an  open  dialogue  with,  and  is 
accountable  to,  the  EU  institutions  —  the  European 
Parliament  and  the  Council  —  including  attending 
regular scrutiny hearings at the Economic and Monetary 
Policy Committee (ECON) of the Parliament. In addition, 
ESMA  co-operated  closely  with  the  Parliament’s 
Budget Committee and Budgetary Control Committee 
with  the  aim  of  obtaining  a  Budgetary  Discharge  for 
the  preceding  year.  ESMA  regularly  participates  in 
the  Council’s  Financial  Services  Committee  and 
attends  twice  a  year  the  Financial  Stability  Table  of 
the  Economic  and  Financial  Committee,  contributing 
to  strategic  reflections  on  financial  services  issues. 
ESMA  has  also  worked  on  building  its  co-operation 
with  the  Single  Supervisory  Mechanism  (SSM)  and 
the European Central Bank in areas of mutual interest 
such as market infrastructures and financial stability.

International organisations and non-EU regulators

A  key  element  in  ESMA’s  work  continues  to  be  its 
membership  of,  and  cooperation  with,  international 
organisations, such as IOSCO and the FSB, in important 
areas  related  to,  inter  alia,  financial  stability,  shadow 
banking, credit rating policy and the regulation of financial 
benchmarks.  It  maintained  its  input  to  EU  regulatory 
dialogues  with  third  countries,  playing  a  central  role  in 
assessing the equivalence of third-country supervisory 
regimes and provided technical advice on various issues 
to  the  Commission  and  opinions  to  the  institutions  on 
a range of topics within its area of competence.

ESMA  and  IOSCO  joined  forces  in  2017  in  order 
to  explore  possible  safeguards  to  be  put  in  place  by 
third-country  authorities  to  allow  for  a  continuation  of 
exchanges  of  information,  including  of  personal  data, 
under  the  upcoming  EU  General  Data  Protection 
Regulation  (GDPR).  Further  to  guidance  provided  by 
the Working Party 29, ESMA and IOSCO have made 
significant progress in developing a draft administrative 
arrangement for the transfer of personal data between 
EU  securities  markets  regulators  and  third-country 
regulators; finalisation is expected in 2018.

2612  Legal

Objectives 
for 2017

Enhance the legal drafting and 
soundness of legal acts adopted 
by ESMA, minimise the risk of 
legal challenge for ESMA and 
proactively handle complaints/
appeals/actions against ESMA.

Provide clarity on our legal 
toolbox and easy access to all 
applicable acts elaborated by 
ESMA (for our own track record 
and as part of stakeholder 
management).

Easy  access  to  ESMA’s  technical  standards  and 
guidance

To facilitate stakeholders’ access to ESMA guidance, 
which is essential to foster the consistent and effective 
implementation  of  the  same  rules  and  the  use  of 
supervisory  approaches  leading  to  similar  outcomes, 
ESMA  launched  a  new  Q&A  tool,  providing  easy 
access  to  stakeholders  to  consult  existing  Q&As  and 
submit  new  questions.  The  tool  is  available  on  the 
ESMA  website36,  which  contains  an  overview  of  all 
Q&As  developed  by  ESMA  per  legislative  act  and 
instructions on submitting new questions to ESMA.

ESMA  has  also  produced  an 
interactive  single 
rulebook37,  an  online  tool  that,  when  finished,  will 
provide  a  comprehensive  overview  of  and  easy 
access  to  all  technical  standards  and  guidance 
adopted  in  relation  to  a  given  directive  or  regulation 
in the securities markets area. ESMA’s objective is to 
provide an interactive version for each key level 1 text 
under ESMA’s remit over time, starting with the UCITS 
Directive.

36  Q&A tool
37 

Interactive Single Rulebook

44 

|  ESMA’s achievements against its 2017 objectives 

European Ombudsman complaints against ESMA

In  2017,  the  European  Ombudsman  (in  charge  of 
investigating  potential  instances  of  maladministration 
in  EU  agencies)  decided  to  close  three  complaints 
submitted against ESMA further to a formal enquiry.

In  particular,  two  cases  concerned  complaints  made 
by customers of Iron FX about ESMA’s alleged failure 
to  take  action  in  this  matter  against  CySEC  and  the 
Financial Services Ombudsman (FSO) in Cyprus. The 
European Ombudsman accepted ESMA’s position that 
it has no role in relation to the Cyprus FSO as it is not 
a  competent  authority  or  supervisory  authority  within 
the  meaning  of  Article  1(2)  of  the  ESMA  Regulation. 
With  regards  to  CySEC,  ESMA  explained  all  the 
measures taken so far with respect to investments in 
complex  financial  products  by  retail  investors  as  well 
as the supervisory action plan put in place by CySEC 
under  the  co-ordination  of  ESMA.  The  European 
Ombudsman took a decision on one of the two cases 
in  February  2017,  when  ESMA  was  still  assessing 
whether  a  breach  of  union  law  investigation  should 
be  opened  against  CySEC  in  this  particular  case38. 
The  European  Ombudsman  decided  that  no  further 
inquiries were justified at that stage. There is, however, 
another complaint in relation to this matter (submitted 
at a later date) which is still open.

In addition, as regards another complaint lodged with 
its  Office  against  ESMA,  the  European  Ombudsman 
did  not  find  any  grounds  for  inquiring  into  ESMA’s 
practices  of  not  translating  Q&A  documents  into  the 
24  EU  official  languages  and  decided  to  close  the 
complaint.  According  to  the  European  Ombudsman, 
the linguistic rights of EU citizens have to be reconciled 
with the necessity of ensuring administrative efficiency 
and protecting the EU budget.

262 Corporate services

In 2017, still supporting an increased number of tasks and 
staff, ESMA continued to improve its internal processes. 
The emphasis remained on providing improved support 
and working conditions to the staff, in their daily work, 
and to stakeholders, in their interaction with ESMA.

Practicalities around meetings, where much of ESMA’s 
work is carried out with numerous stakeholders coming 
from all over the EU, continued to be improved with the 

38  As indicated, since then and after an in-depth assessment of 
all the complaints received in relation to this matter, ESMA’s Chair 
recommended not to open a formal breach of EU law investigation 
because significant supervisory work and regulatory actions had 
already been taken by the concerned NCA (see Section 2.1.8).

greater use of online, audio, video and web conferencing 
tools.  These  tools  facilitate  meeting  registration  and 
group work, improve traceability and reduce costs.

Project  management  was  still  a  key  priority 
to 
continuously  improve  the  functioning  of  ESMA  as  an 
organisation. Internal projects completed in 2017 ranged 
from going paperless to e-administration, from a new 
mission tool to a contract database in SharePoint, from 
language e-learning for 30 EU agencies to new lower-
cost  medical  services,  and  from  the  reorganisation 
of  the  different  service  desks  to  the  updating  of  the 
human  resources  system  or  the  transitional  updating 
of  the  activity-based  management  (ABM)  system,  as 
described in more detail below.

In 2017, ESMA also launched a key new multi-annual 
project:  entitled  ESMA  2020  Premises,  aimed  at 
ensuring  ESMA  will  have  suitable,  cost-efficient  and 
duly approved premises at the beginning of 2020 after 
the expiration of its current lease on 31 December 2019.

ESMA  advanced  considerably  in  2017  in  terms  of 
the  digitalisation  of  its  administrative  processes  with 
its  Paperless  project:  more  than  30  processes  were 
digitalised  during  the  year,  especially  in  the  fields  of 
finance, procurement and human resources. This has 
led to a general improvement of these activities, notably 
in terms of speed and reliability, while also reinforcing 
traceability  and,  last  but  not  least,  contributing  to 
a greener environment by reducing paper consumption.

Important progresses were also made in the fields of IT 
security,  cybersecurity  and  business  continuity,  while 
these  topics  were  becoming  even  more  important  in 
a changing and riskier general environment.

Additionally,  the  EU  IT  projects  remained  a  key  area 
of activity of ESMA in 2017. These regulatory projects 
aim  to  develop  IT  systems  that  support  supervisory 
convergence and exchange of financial data amongst 
NCAs and between NCAs, ESMA and the public. They 
are further detailed below.

2621  Facility management

Objective 
for 2017

Provide proactive support to 
ESMA: ensure the smooth 
running of the facilities of the 
Authority and the acquisition 
of goods and services, in 
accordance with the EU 
public procurement rules and 
procedures; ensure the health 
and safety of ESMA staff and 
visitors.

ESMA’s achievements against its 2017 objectives  

|  45

In 2017, ESMA organised 742 meetings and workshops 
within  ESMA  premises  and  received  8,056  external 
participants  to  these  meetings.  A  new  paperless 
mission tool was implemented in 2017 to improve and 
speed up the related process, replacing a paper-based 
system.

ESMA also successfully managed the extension of its 
premises  to  part  of  the  ground  floor  of  the  building  it 
occupies, notably providing needed additional meeting 
rooms  for  staff  and  external  visitors.  This  extension 
was necessary because of the increases in the number 
of staff and tasks.

In 2017, ESMA kept working on its recycling activity and 
on  the  Eco-Management  and  Audit  Scheme  (EMAS) 
project launched in 2016, a project aiming to evaluate, 
report  and 
improve  environmental  performance 
while  involving  staff  members  and  stakeholders.  The 
objective  is  to  evaluate  how  ESMA  makes  use  of 
environmental systems, to assess the situation of the 
scheme’s  implementation  in  its  premises  and  to  aim 
at  a  reduction  of  the  direct  environmental  impact  of 
ESMA’s activities in two fields: the core activity of ESMA 
(e.g. policymaking and development of IT databases); 
and 
the  day-to-day  activities  of  ESMA:  energy, 
mobility,  waste,  natural  resources  (paper,  water)  and 
public procurement. In 2017, ESMA recycled 17.8 tons 
of  paper,  which  represented  the  saving  of  304  trees 
and 3.86 tons of carbon dioxide.

2622  Finance and procurement

Further align the financial and 
procurement function to the 
needs and strategy of ESMA with 
the following objectives:

Objective 
for 2017

enhance the efficiency of all 
financial and procurement 
processes for the benefit of all 
ESMA actors involved;

re-engineer processes to 
maximise the user friendliness 
towards our internal clients 
without compromising compliance 
with the rules.

ESMA’s 2017 budget

In  2017,  ESMA’s  core  budget  increased  by  €3.5m 
compared  to  the  previous  year,  from  €36.9m  in 
2016 to €40.4m  in  2017.  In  addition,  the  core  budget 
was complemented by a delegated budget of €1.5m in 
order to perform NCAs’ delegated tasks.

By the end of 2017 ESMA had received revenues from 
six separate streams of income.

• 

• 

• 

• 

the  NCAs  of  the  Member  States  –  €17.4m, 
representing  41%  of  the  total  revenues  (€16.9m 
from NCAs of Member States and €0.5m from EEA 
NCAs);

the European Union - €11.0m, representing 26%;

fees  charged  to  credit  rating  agencies  -  €9.4m, 
representing 22%;

fees  charged 
representing 6%;

to 

trade  repositories  -  €2.5m, 

•  NCAs’  contribution  for  delegated  tasks  -  €1.5m, 

representing 4%; and

• 

charges 
(participation  charges 
conference) - €0.1m representing less than 1%.

for  ESMA’s 

2017 revenues by source

1%

4%

6%

22%

41%

26%

National Competent Authorities 
European Union 
Credit Rating Agencies 
Charges
Trade Repositories
NCAs - for delegated tasks

2017 — Overall financial indicators

• 

• 

• 

100.0% of the budget was committed.

89.8% of the budget was paid within the year.

96.5% of the 2016 budget credits carried forward 
to 2017 were paid within the year.

46 

|  ESMA’s achievements against its 2017 objectives 

internal staff member. 74% of these days corresponded 
to  trainings  organised  by  ESMA  (in-house  trainings). 
These figures do not include e-learning courses. The 
categories of internal training were the following:

• 

technical skills;

•  non-technical skills;

• 

IT for end users;

•  management and leadership.

Moreover,  a  language-learning  policy  (adopted  in 
2015) gives guidelines to ESMA’s staff on the different 
language-training  tools  and  methods  available  at 
ESMA.

Overview of staff data in 2017

ESMA employs different categories of staff:

•  Temporary Agents (TA)39,

•  Contract Agents (CA) and

•  Seconded National Experts (SNEs).

At  the  end  of  2017,  a  total  of  224  staff  (TA/CA/SNE) 
was  employed,  a  10%  increase  compared  to  one  year 
before. Within that number, on 31 December 2017 ESMA 
employed  201  statutory  staff  members,  146  TAs  and 
55  CAs,  whereas  the  Human  Resources  Staffing  Plan 

39  Posts for Temporary Agents are listed in the establishment plan 
of ESMA, and in the EU budget.

Improvements of finance and procurement 
processes

from 

in  2017 

fully  benefited 

its  project 
ESMA 
completed in 2016 related to defining an activity-based 
management  (ABM),  activity-based  budgeting  (ABB) 
and activity-based costing (ABC) models. This allows 
ESMA to accurately and transparently plan and report 
on the allocation of its resources.

A  major  milestone  in  2017  was  the  digitalisation  and 
process  optimisation  of  all  financial  and  procurement 
processes,  with  the  implementation  of  the  Paperless 
system described above.

2017 again saw a high volume of procurement activity 
resulting 
framework  contracts  which  provide 
administrative  stability  in  the  medium  and  long  term. 
In 2017, ESMA managed 14 procurement procedures.

in 

2623  Human Resources

Objective 
for 2017

To deliver top-class HR services 
enabling ESMA to attract, 
deploy and retain the talents 
required to achieve its objectives 
and ensuring efficient HR 
administration while at the same 
time fulfilling the regulatory 
requirements of an EU authority.

ESMA continued to develop its Human 
Resources function

Staff allocation and development

The  allocation  and  recruitment  of  staff  is  based  on 
the Authority’s Establishment Plan, its budget and the 
Programming Document.

In  the  area  of  personnel  administration,  in  2017  39 
newcomers joined ESMA and 22 staff members left the 
service. The staff turnover rate for the year amounted 
to 6.5% (target <10%).

In the area of recruitment, in 2017 ESMA published 16 
vacancy notices of which 11 were for Temporary Agent 
(TA) posts, three were for Contract Agent (CA) posts, one 
was for a position of Seconded National Expert (SNE) 
and one was for trainees. The Authority received a total 
of  1,422  applications  or  an  average  of  89  applications 
per vacancy. 202 candidates were interviewed.

In  the  area  of  staff  development,  in  2017  ESMA’s 
internal  staff  (TAs,  CAs  and  SNEs)  attended  a  total 
of 560 days of training or an average of 2.5 days per 

ESMA’s achievements against its 2017 objectives  

|  47

Statutory staff population (TA & CA) - year-end view

250

200

150

100

50

0

55

50

74

64

5

10

126

108

18

2011

2012

2013

TA

181

201

136

146

45

55

2016

2017

152

125

161

129

27

32

2014

CA

2015

Total

Gender balance

2017 targeted 205 statutory staff members (98% of the 
current implementation rate). This was 20 more statutory 
staff members than one year before, or an 11% increase.

In addition, at the same date, 23 SNEs were working at 
ESMA (the same number as one year before), bringing 
the total number of ESMA staff to 224, versus 204 one 
year before or a 10% increase.

ESMA  tries  to  reach  the  best  possible  gender  and 
geographical  balance  during  its  recruitment  process. 
The global gender balance amongst ESMA staff (TAs, 
CAs and SNEs) was 54% (male) and 46% (female) in 
2017.

Gender distribution at ESMA 

Gender distribution per category 

103
(46%)

84

90
80 
70 
60 
50 
40 
30 
20 
10 
0 

121
(54%) 

Female 

Male 

62

35

6

20

17

Male

TA

CA

Female

SNE

Gender distribution per category 

SNE

FGII

FGIII

FGIV

AST

AD

6

17

21

14

17

3

8

4

0 

10 

20 

30 

40 

Female 

48 

|  ESMA’s achievements against its 2017 objectives 

54

50 

Male 

60 

70 

80

80 

90 

Distribution of temporary agents by grade and gender

20 

18 

16 

14 

12 

10 

8 

6 

4 

2 

0 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

1 

2 

3 

4 

5 

6

AD

AST 

Male 

Female 

Geographical balance

At  the  end  of  2017,  ESMA  staff  (TAs/CAs/SNEs) 
included  nationals  from  23  different  EU  Member 
States,  one  national  from  the  European  Economic 

Area (Norway), one Australian and one Singaporean 
(SNEs).  The  following  table  shows,  by  alphabetical 
order, the distribution of nationalities per contract type 
and function group.

AT AU BE BG CZ DE DK EL ES FI FR HU IE

IT

LT LV MT NL NO PL PT RO SE SG SK UK Total

1

TA

CA

SNE

1

Total 2

1

1

2

1

3

3

2

1

6

1

2

8

4

2

1

16

3

1

8

5

1

1

2

1

35

18

1

5

1

5

26

2

8

2

1

3

20

3

12 14

1

54

3

11

36

2

1

1

4

1

5

2

1

1

5

1

7

2

1

3

8

4

2

1

12

3

1

1

2

10

146

55

23

7

2

17

224

%

1% 0% 1% 3% 1% 9% 1% 5% 6% 0% 24% 1% 5% 16% 1% 0% 0% 2% 0% 3% 1% 5% 1% 0% 1% 8% 100%

ESMA nationalities 

60

50 

40 

30 

20 

10 

0 

54

36

20

17

14

12 12 11

7

6

FR 

IT  DE  UK 

ES 

EL

RO 

IE 

PL  BG 

NL 

BE 

SE  CZ 

HU 

DK 

PT 

SK 

LT  AT  FI 

NO 

MT SG LV AU

5

3

3

3

3

3

3

2

2

2

1

1

1

1

1

1

ESMA’s achievements against its 2017 objectives  

|  49

Nationality distribution by staff category at ESMA 

1

18

2

8

35

26

55

50

45

40

35

30

25

20

15

10

5

0

1

3

7

16

10

1

5

8

4

8

4

8

5

1
5

2
5

FR

IT

DE

UK

ES

EL

RO

IE

PL

1
2
3
BG

1

4

NL

1
2
BE

1
2
SE

1
2
CZ

1
2
HU

2
1
DK

1
2
PT

2

2

SK

LT

1
AT

1

1

1

1

1

1

FI

NO

MT

SG

LV

AU

TA

CA

SNE

ESMA staff per department (as of 31122017)

Temporary Agents (TA)

Contract Agents (CA)

Seconded National Experts (SNE)

Total

SMG CAD MKT

4

1

5

10

2

2

14

26

5

7

38

INI

21

4

4

29

SUP RAE

LCE

RES Total

25

6

3

34

14

13

27

13

5

4

22

33

19

3

55

146

55

23

224

Below are the acronyms of the relevant departments:

•  SMG: Senior Management;

•  CAD: Corporate Affairs;

•  MKT: Markets;

• 

INI: Investors and Issuers;

•  SUP: Supervision;

•  RAE: Risk Analysis;

•  LCE: Legal, Convergence and Enforcement; and

•  RES: Resources

Improvement of human resources processes

In  2017,  a  medical  services  contract  was  established 
whereby  pre-recruitment  and  annual  medical  check-
ups may all be conducted in Paris instead of Brussels, 
which results in a saving of both the mission budget for 
ESMA and time for staff members. Additionally, ESMA 
now has a medical advisor in Paris.

ESMA also implemented in 2017, within the organisation 
EU-LEARN, the new training and learning management 
tool  from  the  European  Commission,  extending  the 
training resources available to its staff members.

Additionally,  ESMA  adopted  its  internal  policy  on 
whistleblowing  on  30  January  2017.  This  policy 
constitutes an important step in ensuring sound fraud 
identification,  reporting  and  management  through 
confidential and safe channels for staff. This policy is 
applicable to everyone working in ESMA, irrespective 
of their administrative position or status, i.e. TAs, CAs, 
SNEs, on-site consultants, temporary workers (interim 
staff) and trainees.

Lastly,  ESMA  successfully  led  an  inter-EU  Agency 
open  tender  procurement  procedure  for  language 
e-learning,  making  an  online  learning  platform  for 
European  languages  available  to  staff.  Thirty  EU 
Agencies joined this procedure.

50 

|  ESMA’s achievements against its 2017 objectives 

2624  Information and communication 

technologies

Objective 
for 2017

Provide proactive support to 
ESMA: prepare and implement 
ESMA’s IT strategic programme 
as well as ensure the 
implementation and maintenance 
of the IT systems and networks of 
the Authority.

ESMA’s IT projects

ESMA’s ICT activity represents two main categories:

• 

support to ESMA as an organisation; and

•  EU  IT  projects  aiming  to  support  supervisory 
convergence,  risk  analysis  and  exchange  of 
financial data amongst NCAs and between NCAs, 
ESMA and the public.

The  vast  majority  of  the  resources  working  in  the 
ICT  Unit  works  for  the  core  activity  of  ESMA.  As  an 
indication, out of the 25 internal (TAs/CAs/SNEs) full-
time equivalents working in the ICT Unit at the end of 
2017, most of them were working for the EU IT projects 
that  are  detailed  in  the  tables  in  the  supervisory 
convergence section.

Last,  it  should  be  noted  that  some  resources  —  for 
example  the  helpdesk  —  provide  support  for  both 
staff  working  at  ESMA  and  external  users  (users  of 
ESMA’s  systems  in  the  NCAs  or  supervised  entities, 
for example).

ESMA is currently running five IT programmes, of which 
four are related to EU regulatory IT projects. In addition, 
ESMA  provides  operational  support  to  a  growing 
number  of  end  users  and  carries  out  maintenance 
activities of the existing IT systems in use.

Information technology

The provision of EU IT systems is a key ESMA activity, 
which  is  reflected  in  its  budget.  In  2017,  a  budget  of 
€2.3m  was  allocated  for  the  development  of  new  IT 
systems and the enhancement of the existing systems, 
of  €5.4m  for  the  maintenance  of  existing  IT  systems, 
and of €1.5m for the development and maintenance of 
delegated IT projects. These amounts were in addition 
to the €0.3m dedicated to IT office equipment. In total, 
IT  expenses  therefore  amounted  to  €9.5m  or  23%  of 
ESMA’s total budget.

An  IT  Management  and  Governance  Committee 
(ITMG) oversees the EU IT projects. A business owner 
is  assigned  to  each  IT  system.  The  EU  IT  projects 

ESMA’s achievements against its 2017 objectives  

|  51

are  those  that  are  carried  out  to  exchange  financial 
data  with  external  stakeholders,  such  as  the  NCAs, 
the  CRAs  and  the  TRs.  These  projects  are  steered 
by  both  an  ESMA  Standing  Committee  in  charge  of 
the regulatory aspects and by the ITMG. Both groups 
report to the BoS.

In 2017, ESMA fully benefited from the implementation 
the year before of a new IT tool for project and portfolio 
management (PPM), thus enhancing the maturity and 
quality of the multi-annual IT planning. ESMA also kept 
using  the  project  management  methodology  of  the 
EU  institutions  (PM²)40,  a  methodology  systematically 
applied  by  the  Authority  since  2015  to  all  of  its  IT 
projects.

Support to ESMA as an organisation

At the end of 2017 ESMA was managing 40 applications 
(+33%  compared  to  one  year  before)  and  237  virtual 
servers.

ESMA’s  ICT  helpdesk  managed  26,727  tickets  (i.e. 
requests for support) in 2017, a massive +74% increase 
compared  to  2016,  after  an  already  large  increase 
between 2015 and 2016 (+54%).

Annual evolution of the total number of tickets managed 
by ESMA since 2012.

Number of tickets

30 000

25 000

20 000

15 000

10 000

5 000

0 

+74%

2012

2013

2014

2015

2016

2017

ESMA  continued  to  upgrade  its  workplace  tools, 
notably with the arrival of the collaboration tool Skype 
for telephony and video conferencing.

40  Project Management Methodology (PM2)

27 Management

271 Assessment of the audit results 
during the reporting year

European Court of Auditors

ESMA  is  audited  every  year  by  the  European  Court 
of  Auditors  (ECA).  The  audit  provides  a  Statement 
of  Assurance  as  to  the  reliability  of  the  accounts 
of  the  Agency  and  the  legality  and  regularity  of  the 
transactions underlying them.

The ECA conducted its annual audit of ESMA’s 2016 
accounts. In its Statement of Assurance 2016, the ECA 
expressed the following opinions:

•  ESMA’s  annual  accounts  present  fairly,  in  all 
material  respects,  its  financial  position  as  at  31 
December  2016,  and  the  results  of  its  operations 
and its cash flows for the year in accordance with 
the provisions of its Financial Regulation, and the 
accounting  rules  adopted  by  the  Commission’s 
accounting officer;

•  Transactions,  underlying  the  annual  accounts  for 
the  year  ending  on  31  December  2016,  are  legal 
and regular in all material respects.

The ECA audit of the 2017 annual accounts is ongoing. 
There  has  been  no  preliminary  finding  following  the 
first mission on the regularity of the transactions. The 
draft report will be available by mid 2018.

Internal Audit Service

ESMA  is  also  audited  by  the  Internal  Audit  Service 
(IAS) of the European Commission.

In  2017  IAS  performed  an  audit  on  Peer  Reviews  of 
National  Competent  Authorities.  The  final  report  was 
received on 12 September 2017.

IAS concluded that the audited peer review processes 
are generally adequate, effective and efficient. ESMA 
has established a procedural framework adapting it to 
the needs of stakeholders, and it adequately plans and 
monitors  the  process  of  peer  reviews.  The  Authority 
established  an  effective  input  collection  from  NCAs 
through  questionnaires  and  on-site  visits,  as  well  as 
an  independent  and  professional  assessment  of  the 
information  collected.  ESMA  implements  the  process 
in  a  collaborative  manner  to  ensure  an  impartial  and 
accepted  result.  To  maximise  the  impact  of  Peer 

52 

|  ESMA’s achievements against its 2017 objectives 

Reviews  ESMA  performs  follow-ups  of  the  past 
engagements  to  monitor  how  previously  identified 
deficiencies have been addressed.

IAS made four recommendations for the improvement 
of the process, though none of them are critical or very 
important.

IAS  started  another  audit  in  2017  on  revenues  and 
activity based management, which is still ongoing.

•  bottom  up:  identification  of  risks  at  department 

level;

• 

top  down:  management  assessment  and 
evaluation  of  strategic  risks  considering  the  input 
from departments.

Significant  risks  are  then  reviewed  by  the  ESMA 
Management  Board,  which  endorses  the  risks  and 
action plans.

272 Follow-up of recommendations 
and action plans for audits

ESMA  follows  up  and  reports  to  the  Management 
Board  on  all  audit  findings  and  recommendations  on 
a quarterly basis.

Internal Audit Service

Top  risks,  identified  during  the  assessment,  are 
summarised  and 
the  ESMA  Single 
Programming  Documents.  The  top  risks  identified  for 
2017 were:

included 

in 

1. 

the  potential  consequences  of  Brexit  on  EU 
securities markets and on ESMA as an organisation;

2.  difficulties and potential unexpected consequences 

of MiFID implementation;

Neither  critical  nor  very  important  recommendations 
were open as of 31 December 2017.

3.  data  availability  and  quality  at  ESMA,  NCAs, 

supervised entities and/or other stakeholders; and

273 Follow-up of observations from 
the Discharge Authority

On  18  April  2018,  the  European  Parliament  voted 
positively on the discharge of ESMA’s 2016 accounts. 
This is the final approval of the budget implementation 
for 2016, and the decision is based on a review of the 
annual accounts and the ECA annual report.

28 Assessment of the 
effectiveness of 
the Internal Control 
Systems

281 Risk management

ESMA  operates 
in  an  environment  of  growing 
uncertainty.  To  assist  the  Authority  in  visualising, 
assessing  and  mitigating  the  risks  that  threaten  the 
delivery of its mission, ESMA has developed a regular 
process  to  identify,  assess  and  manage  risks  across 
the organisation.

The  annual  organisational  risk  assessment  consists 
of identifying, assessing and mitigating organisational 
risks; it is performed in two exercises:

4.  reputational  risk  for  ESMA  in  case  of  mis-selling 

scandals (consumer protection).

None  of  the  risks  identified  in  2017  were  considered 
critical.

282 Compliance and effectiveness of 
Internal Control Standards (ICS)

On  5  November  2012, 
the  Management  Board 
adopted  the  Internal  Control  Framework  in  ESMA. 
The Framework covers 16 Internal Control Standards. 
The  Internal  Control  Standards  are  indispensable 
in  order  to  define  the  internal  control  framework, 
foster  clear  accountability  of  the  management,  and 
ensure oversight of the internal control system by the 
Management Board.

The Internal Control Standards specify the necessary 
expectations  and  requirements  in  order  to  build 
an  effective  system  of  internal  control  that  could 
provide  a  reasonable  assurance  on  the  achievement 
of  the  ESMA  objectives.  These  control  standards 
were  developed  along  the  lines  of  the  European 
Commission’s  Internal  Control  Standards,  which  are 
based on the international COSO41 standards.

The standards cover the areas of mission and values, 
human  resources,  planning  and  risk  management 
activities, 
processes, 

operations 

control 

and 

41  COSO website, viewed on 18 May 2017

ESMA’s achievements against its 2017 objectives  

|  53

information and financial reporting, and evaluation and 
audit.  Each  Internal  Control  Standard  is  made  up  of 
a number of requirements to be met.

ESMA  reviewed  the  implementation  of  the  internal 
control standards (ICS) in 2017.

The assessment concluded that the system in place is 
compliant with the all the standards, thus providing the 
Authority with reasonable assurance on the reliability 
of  the  internal  control  environment.  The  results  of 
the  assessment  were  sent  to  the  European  Court  of 
Auditors.

Anti-fraud measures and management of 
conflict of interests

The adoption of a code of good administrative behaviour 
with  general  rules  when  dealing  with  the  public  and 
a  decision  on  professional  secrecy,  adopted  in  2011, 
and its accessibility to all staff, together with the Staff 
Regulations,  assures  the  availability  of  a  practical 
guide on ethical conduct and reporting of irregularities.

In  January  2015,  the  Management  Board  of  ESMA 
adopted the ESMA Anti-Fraud Strategy 2015-2017 to 
enhance ESMA’s capabilities in preventing, detecting, 
investigating and sanctioning potential fraud cases.

In order to promote and strengthen the principles and 
practice  of  ethics  and  organisational  values  among 
its staff, ESMA has appointed three staff members as 
Ethics  Officer  and  their  deputies,  respectively.  This 

allows for the development of strong in-house expertise 
and a prompt response and reaction to ethics issues. 
The Internal Audit Service of the Commission labelled 
this organisation as a best practice.

Since  2015,  ESMA  has  a  policy  in  place  on  conflict 
of interest for non-staff, including the members of the 
Board  of  Supervisors,  Management  Board  and  the 
Board of Appeal. The curriculum vitae and declarations 
of interest of all board members and senior management 
of ESMA are published on ESMA’s website.

ESMA  also  implemented  the  policy  on  conflict  of 
interest  for  staff  in  2015,  adapted  from  the  existing 
Ethics  Guide.  It  provides  clear  guidance  on  conflict 
of  interest  and  on  contact  with  stakeholders,  among 
others.  All  staff  members  are  required  to  fill  out  an 
annual  declaration  regarding  potential  conflicts  of 
interest and are bound to request clearance for dealing 
in financial instruments.

Specific measures for avoiding conflicts of interest are 
taken during recruitment procedures and procurement 
selection panels.

Concerning the collaboration with the European Anti-
Fraud  Office  (OLAF),  and  according  to  Article  22  of 
the regulation establishing ESMA, in January 2011 the 
Management  Board  approved  a  decision  concerning 
the  terms  and  conditions  for  internal  investigations 
in  relation  to  the  prevention  of  fraud,  corruption  and 
any  illegal  activity  detrimental  to  the  Union’s  interest. 
ESMA  is  also  part  of  the  Interinstitutional  Agreement 

54 

|  ESMA’s achievements against its 2017 objectives 

of  25  May  1999  concerning  internal  investigations  by 
OLAF.

the 

ESMA  has  developed  a  whistleblowing  procedure 
for 
fraud  or 
internal  reporting  of  cases  of 
serious  misconduct  as  well  as  rules  on  conducting 
administrative  enquiries  and  disciplinary  procedures, 
and has also set up a disciplinary board.

29 Management assurance

291 Review of the elements 
supporting assurance

The  main  building  blocks  of  the  Executive  Director’s 
declaration of assurance are:

The authorising officers by delegation confirmed their 
reasonable  assurance  that,  overall,  suitable  controls 
are  in  place  and  working  as  intended,  and  identified 
risks are being appropriately monitored and mitigated.

Given  the  control  system  in  place,  the  information 
attained  from  the  building  blocks  above  and  the  lack 
of  critical  findings  from  the  Court  of  Auditors  and  the 
Internal  Audit  Service  at  the  time  of  the  declaration, 
there  is  no  reason  to  question  the  efficiency  and 
effectiveness of the control system in place.

292 Reservations

Based on the assurance provided by the control system 
in  place,  the  Executive  Director  sees  no  reason  that 
would justify or require a reservation.

• 

• 

• 

• 

• 

• 

• 

• 

• 

the  Executive  Director’s  own  knowledge  of  the 
management and control system in place;

the observations of the European Court of Auditors 
(ECA) known at the time of the declaration;

the  observations  of  the  Internal  Audit  Service 
known at the time of the declaration;

the  declarations  of  assurance  made  by 
the 
authorising  officer  by  delegation  to  the  Executive 
Director;

the result of the assessment of the internal control 
standards;

the ex ante and ex post controls;

Materiality criteria used

In  line  with  the  suggestion  of  the  guidelines  on  the 
preparation  of  the  annual  activity  report,  ESMA  used 
the  qualitative  and  quantitative  materiality  criteria 
described below to assess if the issues identified merit 
a reservation.

Qualitative criteria used

ESMA  would  consider  significant  the  weaknesses  in 
the internal control system that fall under the following 
qualitative criteria:

• 

significant  errors  detected  during  the  control  or 
supervision exercises;

the validation of the accounting systems;

•  a significant weakness in the control system;

the analysis of the list of recorded exceptions;

the summary of OLAF activities.

In support of the annual activity report, all authorising 
officers  are  asked  to  sign  a  declaration  of  assurance 
for their areas of responsibility.

The  purpose  of  these  declarations  is  to  confirm,  on 
the  basis  of  the  facts  in  their  possession,  that  the 
information contained in the report gives a true and fair 
view — except if otherwise specified in any reservations 
related to defined areas of revenue and expenditure — 
and  that  the  resources  assigned  have  been  used  for 
their  intended  purpose  and  in  accordance  with  the 
principle of sound financial management.

• 

• 

situations  where  ESMA  does  not  have  sufficient 
evidence  from  internal  control  systems  or  audit 
coverage to be confident in providing the necessary 
assurance;

situations  where  a  major  issue  has  been  outlined 
by  the  ECA  or  the  Internal  Audit  Service  of  the 
Commission  (critical  audit  recommendations  for 
underlying  weaknesses)  relevant  to  the  area 
covered  by  the  declaration  of  assurance  that  are 
not adequately addressed by other internal controls 
and where the materiality threshold is exceeded;

• 

situations  revealed  through  own  control  work  or 
audits where significant risks remain unmitigated;

•  a significant reputational risk.

ESMA’s achievements against its 2017 objectives  

|  55

Quantitative criterion used

to 

the  Commission  guideline  on 

According 
the 
preparation  of  annual  activity  reports,  the  Court  of 
Auditors  uses  a  2%  materiality  threshold.  ESMA  has 
therefore set the quantitative criterion of materiality at 
2% of its total budget.

293 Overall conclusions on 
assurance

Taking  into  account  the  review  of  the  elements 
supporting  assurance,  the  Executive  Director  is  of 
the opinion that the management and control systems 

in  place  at  ESMA  are  working  as  intended,  risks  are 
being  appropriately  monitored  and  mitigated,  and 
improvements  and  reinforcements  are 
necessary 
being implemented.

Based  on  all  the  facts  presented  in  the  report  and  in 
light of the opinions expressed by the Court of Auditors 
on the reliability of the accounts and on the legality and 
regularity of the transactions underlying the accounts, 
ESMA can conclude that the systems in place provide 
reasonable  assurance  that  the  resources  under  the 
responsibility of the Executive Director were used for 
their  intended  purposes  and  in  accordance  with  the 
principles of sound financial management.

56 

|  ESMA’s achievements against its 2017 objectives 

2017 Declaration of Assurance by the Executive Director 
of ESMA

I, the undersigned, Executive Director of the European Securities and Markets Authority,

In my capacity as authorising officer:

Declare that the information contained in this report gives a true and fair view.

State that I have reasonable assurance that the resources assigned to the activities described in the report have 
been used for their intended purpose and in accordance with the principle of sound financial management, and 
that the control procedures put in place give the necessary guarantees concerning the legality and regularity of 
the underlying transactions.

This reasonable assurance is based on my own judgement and on the information at my disposal such as the 
results of the self-assessment, ex-post controls, the work of the Internal Audit Service and the lessons learnt from 
the reports of the Court of Auditors for years prior to the year of this declaration.

Confirm that I am not aware of anything not reported which could harm the interests of the European Securities 
and Markets Authority.

Paris, 14 June 2018

[Signed]

Verena Ross
Executive Director
European Securities and Markets Authority

ESMA’s achievements against its 2017 objectives  

|  57

Annexes

ANNEX I — Access to documents 
requests in 2017

(EC) 
ESMA,  under  Article  17(1)  of  Regulation 
No  1049/2001  (Access  to  Documents  Regulation), 
must include a report in its annual report detailing: (a) 
the  number  of  access  cases  in  which  ESMA  refused 
to grant access to documents; (b) the reasons for such 
refusals;  and  (c)  the  number  of  sensitive  documents 
recorded in the register.

In  2017,  ESMA  received  six  requests  for  access  to 
documents pursuant to Regulation (EC) No 1049/2001. 
These  requests  concerned  a  variety  of  topics,  such 
as:  copies  of  registers  of  natural  persons  and  SMEs 
considered  qualified  investors  held  by  NCAs  as 
per  Article  2(3)  of  the  2003  Prospectus  Directive42; 
information  regarding  the  rental  contract(s)  of  the 
building(s)  ESMA  occupies;  documents  containing 
information  on  the  origin,  nature  and  substance  of 
a complaint against a German registered CRA; ESMA’s 
note on the content of ESMA opinions on position limits 
on commodity derivative contracts; emails, letters and 

relating documents sent by a Member of the European 
Parliament  to  ESMA  on  MiFID  II,  MiFIR  and  PRIIPs 
and cybersecurity.

All  the requests were processed  by  year end, except 
for  one  that  was  received  at  the  very  end  of  2017. 
In  one  case  ESMA  did  not  possess  the  requested 
document. In another case ESMA provided full access 
to  the  requested  document.  In  the  remaining  three 
cases  ESMA  decided  to  grant  only  partial  access  to 
the  documents  as,  in  the  first  case,  the  disclosure 
of  certain  information  would  have  undermined  the 
protection of the privacy and integrity of the individual, 
while  in  the  second  case  a  requested  document 
contained  confidential  supervisory  information  which 
could  not  be  disclosed.  In  the  third  case  access  was 
only partially granted, as disclosing some parts of the 
relevant  document  would  have  seriously  undermined 
ESMA’s decision-making process.

42  Replaced by Article 1(2)(b) of the revised Prospectus Directive 

Annexes 

|  59

ANNEX II — Reporting on key 
performance indicators

ESMA has defined a list of key performance indicators that are regularly reported to the Management Board. 
ESMA’s work programme in 2017 was measured against these indicators.

Activity

Key performance indicator

Results

Non-compliance with Guidelines and recommendations

% of IT systems delivered compared to planned

Promoting supervisory 
convergence

Number of peer reviews conducted

Number of opinions issued

Number of questions addressed in ESMA’s published Q&As

Assessing risks to investors, 
markets and financial stability

Number of risk topics analysed

Completing a single rulebook 
for EU financial markets

Number of adopted technical standards and technical advice 
approved by ESMA’s Board of Supervisors

17

95%

2

160

139

9

28 TS

5 TA

Direct supervision of specific 
financial entities

Number of thematic and individual investigations (opened in the 
year according to annual plan or individual strategies)

4/4 (100%)

Number of applications for registration not assessed within the 
time limits

Rate of implementation of commitment appropriations in ESMA’s 
core budget43

Rate of budget outturn44

Organisational implications

Average vacancy rate

Percentage of completion of the activities of the Annual Work 
Programme

Rate of external and accepted internal audit recommendations

43  ESMA’s core budget (C1 credits) does not include the external assigned revenue for the delegated tasks.
44  Level of payments versus level of commitments in ESMA’s core budget for 2017 (C1 credits).

60 

|  Annexes

0

100%

89.8%

3%

90%

93%

ANNEX III — ESMA’s Boards and 
Standing Committees

The  ultimate  decision-making  body  of  ESMA  is  the  Board  of  Supervisors,  whereas  the  Management  Board 
ensures that the Authority carries out its mission and performs the tasks assigned to it.

ESMA’s Boards and their 2017 composition

Members of the Management Board as at 31 December 2017

Member

Authority

Country

Steven Maijoor

ESMA (Chair)

Gabriela Figueiredo Dias

Comissão do Mercado de Valores Mobiliários (CMVM)

Portugal

Klaus Kumpfmüller

Finanzmarktaufsicht (FMA)

Elisabeth Roegele

Bundesanstalt für  
Finanzdienstleistungsaufsicht (BaFin)

Austria

Germany

Sebastian Albella Amigo

Comisión Nacional del Mercado de Valores (CNMV)

Spain

Anneli Tuominen

ESMA Vice-Chair (observer)

Ugo Bassi

European Commission (non-voting Member)

EU

Verena Ross

Executive Director (non-voting Member)

On 31 December 2017 there were two vacant Management Board positions.

Annexes 

|  61

Members of the Board of Supervisors as at 31 December 2017

Member

Authority

Steven Maijoor

ESMA

Jean-Paul Servais

Financial Services and Markets Authority (FSMA)

Karina Karaivanova

Комисията за финансов надзор (FSC)

Country

Belgium

Bulgaria

Pavel Hollmann

Česká národní banka (CNB)

Czech Republic

Birgitte Søgaard Holm

Finanstilsynet

Elisabeth Roegele

Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)

Andre Nõmm

Finantsinspektsioon (FSA)

Derville Rowland

Central Bank of Ireland

Charalampos Gotsis

Ελληνική Επιτροπή Κεφαλαιαγοράς (HCMC)

Sebastian Albella Amigo

Comisión Nacional del Mercado de Valores (CNMV)

Robert Ophèle

Autorité des Marchés Financiers (AMF)

Pierre Matek

Hrvatska agencija za nadzor financijskih usluga (HANFA)

Denmark

Germany

Estonia

Ireland

Greece

Spain

France

Croatia

Giuseppe Vegas

Commissione Nazionale per le Società e la Borsa (CONSOB)

Italy

Demetra Kalogerou

Επιτροπή Κεφαλαιαγοράς Κύπρου (CySEC)

Gunta Razāne

Finanšu un kapitāla tirgus komisija (FKTK)

Vytautas Valvonis

Lietuvos Bankas

Cyprus

Latvia

Lithuania

Claude Marx

Commission de Surveillance du Secteur Financier (CSSF)

Luxembourg

Gergő Szeniczey

Magyar Nemzeti Bank (MNB)

Marianne Scicluna

Malta Financial Services Authority (MFSA)

Merel Van Vroonhoven

Autoriteit Financiële Markten (AFM)

Klaus Kumpfmüller

Finanzmarktaufsicht (FMA)

Marek Szuszkiewicz

Komisja Nadzoru Finansowego (KNF)

Gabriela Figueiredo Dias

Comissão do Mercado de Valores Mobiliários (CMVM)

Leonardo Badea

Autoritatea de Supraveghere Financiară (ASF)

Miloš Čas

Agencija za trg vrednostnih papirjev (ATVP)

Vladimír Dvořáček

Národná Banka Slovenska (NBS)

Anneli Tuominen

Finanssivalvonta (FSA)

Erik Thedéen

Finansinspektionen (FI)

Hungary

Malta

Netherlands

Austria

Poland

Portugal

Romania

Slovenia

Slovakia

Finland

Sweden

Andrew Bailey

Financial Conduct Authority (FCA)

United Kingdom

62 

|  Annexes

Non-voting members of the Board of Supervisors as at 31 December 2017

Name

Authority

Unnur Gunnarsdóttir

Fjármálaeftirlitið (FME)

Marcel Lötscher

Finanzmarktaufsicht (FMA)

Anne Merethe Bellamy

Finanstilsynet

Adam Farkas

European Banking Authority (EBA)

Fausto Parente

European Insurance and Occupational Pensions Authority (EIOPA)

Francesco Mazzaferro

European Systemic Risk Board (ESRB)

Ugo Bassi

European Commission

Country

Iceland

Liechtenstein

Norway

EU

EU

EU

EU

Frank Buchel

European Free Trade Association (EFTA) Surveillance Authority

EFTA

Standing Committees and Working Groups

Much  of  ESMA’s  work  is  supported  by  Standing 
Committees  (SC),  working  groups  and  task  forces, 
which  draw  together  senior  experts  from  NCAs.  The 
different  ESMA  SCs  are  established  on  a  permanent 
basis. Each committee is chaired by a Board member 
and supported by ESMA staff as rapporteur. SCs also 
have consultative working groups made up of external 
stakeholder representatives.

ESMA’s  SCs  prepare  the  technical  work  on  all  areas 
of  ESMA’s  activities.  However,  the  ultimate  decision-
making  body  of  ESMA  is  the  Board  of  Supervisors, 
whereas  the  Management  Board  ensures  that  the 
Authority  carries  out  its  mission  and  performs  the 
tasks assigned to it.

A table of ESMA’s SCs is set out below; more details 
can  be  found  at  www.esma.europa.eu,  including  the 
mandates of each SC.

Name of Standing Committee

Chair

Committee of Economic and Markets’ Analysis

Steffen Kern (acting), ESMA

Commodity Derivatives Task Force

Edwin Schooling-Latter, FCA, United Kingdom

Corporate Finance Standing Committee

Benoit de Juvigny, AMF, France

Corporate Reporting Standing Committee

Ana María Martínez-Pina García, CNMV, Spain

Credit Rating Agencies Technical Committee

Verena Ross, ESMA

Financial Innovation Standing Committee

Jean-Paul Servais, FSMA, Belgium

Investment Management Standing Committee

Martin Moloney, Central Bank of Ireland

Investor Protection and Intermediaries Standing Committee

Merel van Vroonhoven, AFM, Netherlands

IT Governance and Management Group

Nicolas Vasse, ESMA

Market Data Standing Committee

Hannelore Lausch, BaFin, Germany

Market Integrity Standing Committee

Nicoletta Giusto, CONSOB, Italy

Post-Trading Standing Committee

Robert Ophèle, France

Secondary Markets Standing Committee

Elisabeth Roegele, BaFin, Germany

Supervisory Convergence Standing Committee

João Sousa Gião, CMVM, Portugal

Annexes 

|  63

ANNEX IV — 2017 organisational chart as 
at 31 December 2017

Chair
Steven Maijoor

Executive Director
Verena Ross

Accounting

Markets Dpt
Fabrizio Planta
(acting)

Investors and
Issuers Dpt
Evert van Walsum

Supervision Dpt
Felix Flinterman

Corporate Affairs Dpt
Mette Sicard Filtenborg

Risk Analysis and
Economics Dpt
Steffen Kern

Legal, Convergence
and Enforcement Dpt
Sophie Vuarlot Dignac

Resources Dpt
Nicolas Vasse

Investigation Unit
Raquel de
Julian Artajo

Monitoring &
Strategy

Post
Trading Unit 
TBA

Markets
Integrity

Secondary
Markets

Investment
Management

CRA Policy

Corporate
Finance and
Reporting

Investor
Protection and
Intermediaries

Cooperation

Communication

Markets &
Investors

Data &
Statistics

Legal

Convergence

Internal Control

Innovation &
Products

Enforcement

ICT Unit
Alexandru Dincov

Human
Resources

Facility
Management

Finance &
Procurement

64 

|  Annexes

ANNEX V — Establishment plan and 
benchmarking exercise

ESMA’s staff population 2017 (all categories of staff)

Staff population

Headcount as of 
31122016

Authorised 
under EU 
budget 2017

Headcount as of 
31122017

AD

AST

AST/SC

AD

AST

AST/SC

Officials

TA

Total

CA GFIV

CA GFIII

CA GFII

CA GFI

Total CA

SNE

TOTAL

123

13

136

22

22

1

45

23

204

137

13

150

30

25

55

24

229

134

12

146

31

24

55

23

224

Annexes 

|  65

ESMA’s establishment plan 2017 (Temporary Agents)

Category and grade

Establishment plan in EU 
budget 2017

Filled  
as of 31122017

1

1

2

5

8

13

26

28

26

14

13

137

1

2

3

4

3

13

1

1

2

3

7

23

27

30

18

22

134

1

2

5

2

2

12

150

146

AD16

AD15

AD14

AD13

AD12

AD11

AD10

AD9

AD8

AD7

AD6

AD5

Total AD

AST11

AST10

AST9

AST8

AST7

AST6

AST5

AST4

AST3

AST2

AST1

Total AST

AST/SC6

AST/SC5

AST/SC4

AST/SC3

AST/SC2

AST/SC1

Total AST/SC

TOTAL

66 

|  Annexes

Benchmarking against previous year results45

The table below outlines the results of the fourth job-
screening  exercise  conducted  in  ESMA  and  in  all 
EU  regulatory  agencies.  The  exercise  is  based  on 
Articles  29(3)  and  38(1)  of  the  Framework  Financial 
Regulation.  The  methodology  was  designed  by 
a working group including representatives from different 
EU agencies (including ESMA) and from the European 
Commission (DG Budget, DG Human Resources and 
Security and SG). It was generated as an adaptation, 
refinement  and  clarification  of  the  Commission  job-
screening  methodology,  which  the  Commission  had 
been implementing for several years.

Job type (sub)category

Year 2016 (%)

Year 201746 (%)

Administrative support and co-ordination

Administrative support

Co-ordination

Operational

General operational activities

Programme management and implementation

Top operational co-ordination

Evaluation and impact assessment

Neutral

Accounting, finance, non-operational procurement, 
contract management and quality management, 
internal audit and control

Linguistic activities

155%

11.5%

4.0%

795%

11.5%

58.6%

2.2%

7.2%

50%

5.0%

0.0%

131%

9.1%

4.0%

832%

7.7%

69.8%

1.7%

4.0%

37%

3.7%

0.0%

45  Reference date: 12/12/2016.
46  Reference date: 31/12/2017.

Annexes 

|  67

ANNEX VI — 2017 Annual Accounts  
and Work Programmes

2017 Annual Accounts

The  2017  annual  accounts  of  ESMA  are  produced 
in  accordance  with  its  Financial  Regulation;  they  are 
adopted by ESMA’s Management Board and Board of 
Supervisors and are published on ESMA’s website.

2017 Work Programmes

As  required  by  its  new  Financial  Regulation,  ESMA 
produced  a  programming  document  covering  the 
period  of  2018  to  2020;  it  set  out  a  three-year  work 
programme,  a  detailed  annual  work  programme  for 
2018 and a budget and resourcing plan.

An  annual  work  programme  is  adopted  yearly  in 
September  for  the  following  year  by  the  Board  of 
Supervisors.  The  Annual  Work  Programme  provides 
a breakdown of the overall activities into various sub-
activities  and  also  includes  an  estimation  of  human 
(full-time  equivalents)  and  financial 
(budgetary 
expenditure) resources per area of activity as well as 
key performance indicators. In addition to the Annual 
Work  Programme,  ESMA  also  publishes  various 

specific work programmes providing more detail about 
its activities.

ESMA  published  five  work  programmes  in  2017 
which  set  out  the  work  it  intended  to  carry  out  as  an 
organisation in general but also in specific areas. The 
work  programmes  that  were  published  on  ESMA’s 
website in 2017 were:

•  Annual Work Programme

•  Risk Assessment Work Programme

•  Regulatory Work Programme

•  Supervisory Work Programme

•  Supervisory Convergence Work Programme

the  work  programmes 

The  delivery  against 
is 
monitored  on  an  ongoing  basis,  with  progress  on  its 
implementation reported to the Management Board on 
a  quarterly  basis.  A  comprehensive  set  of  reports  on 
key  administrative  activities  such  as  recruitment  and 
budget execution is provided monthly to the Executive 
Director and quarterly to the Management Board.

68 

|  Annexes

esma

European Securities and  
Market s Authority

A
n
n
u
a

l

R
e
p
o
r
t

2
0
1
7