New supervisory and oversight mandates
The EU financial markets landscape is currently undergoing a significant transformation with the rise of new technology and the proliferation of investment products and services with ESG features or performance targets. In line with its mandate to safeguard financial stability at the European level, ESMA has recently received new supervisory and oversight tasks and responsibilities related to three types of market entities that will play substantial roles in the European financial ecosystem.
EU financial markets and its participants are primarily supervised at national level, while ESMA supervises some key financial market entities with EU-wide activities. ESMA centrally supervises those entities that form essential parts of the financial market infrastructure.
Direct supervision
ESMA supervises a range of entities in the EU financial markets. These include:
- All EU registered Credit Rating Agencies
- Trade Repositories
- Securitisation Repositories
- Certain Data Reporting Service Providers
- Certain Benchmark Administrators; and
- Tier 2 Central Counterparties outside the EU
New mandates
Upcoming supervisory mandates↓
New supervisory powers
The new supervisory tasks give ESMA supervisory powers over 2 new types of entities of the European financial ecosystem:
- External Reviewers of EU Green Bonds
- Consolidated Tape Providers (CTPs)
For those entities that are supervised at national level, ESMA takes an active role to promote sound, efficient, and consistent supervision, and effective coordinated supervision across the EU.
New oversight powers
ESMA, EBA, and EIOPA share joint responsibilities as Lead Overseers of the designated Critical ICT third-party IT service providers (CTPPs) and will also involve experts from the Competent Authorities in these tasks.
External Reviewers of EU Green Bonds
External Reviewers provide an independent opinion on whether an issuer of European Green Bonds complies with the Taxonomy requirements of the European Green Bonds Regulation.
▸ More information in the External Reviewers of Green Bonds section
Regulation
European Green Bonds Regulation (EuGB)
The Regulation entered into force on 21 December 2023 and will apply from 21 December 2024 through a transitional regime. After 18 months, on 21 June 2026, only external reviewers registered by ESMA will be able to provide their services.
ESMA's role
From 21 June 2026, ESMA will directly supervise external reviewers of European Green Bonds in the EU. This new mandate tasked ESMA with developing 11 Technical Standards (RTS and ITS) on several aspects relating to the registration and supervisory regime for External reviewers. To ensure compliance with the specific disclosure requirements under the EuGB, the National Competent Authorities (NCAs) will supervise issuers of European Green Bonds.
Consolidated Tape Providers (CTPs)
A Consolidated Tape Provider will collect market data about financial instruments from trading venues (TVs) and approved publication arrangements (APAs). The CTPs will be responsible for consolidating data about each financial instrument into a continuous electronic live stream and making it available to the public.
▸ More information in the Consolidated Tape Providers section
Regulation
The Markets in Financial Instruments Regulation (MiFIR)
MiFIR introduces a third category of Data Reporting Service Provider (DRSP): Consolidated Tape Providers (CTPs) for bonds, equities (shares and ETFs), and OTC derivatives (or relevant subclasses of OTC derivative).
ESMA’s role
Following the ESAs’ Review, ESMA was granted new powers to authorise and supervise these new entities. With the 2024 MiFIR review, ESMA is also responsible for selecting every five years the most suitable candidate for each of the three consolidated tapes.
This central role for ESMA entails the drafting of procurement specifications and of technical standards that will define the selection, authorisation, and supervision of CTPs.
ESMA will select the first provider of the bond tape in the first half of 2025, aiming to authorise and start supervising this bond CTP from the second half of 2025. The first provider of the equity tape will be selected in the second half of 2025, with authorisation expected in the first half of 2026. The first CTPs for OTC derivatives (or relevant subclasses of OTC derivative) would, at the earliest, be selected in the first half of 2026.
Digital Operational Resilience Act: CTPPs
Critical ICT third-party service providers (CTPPs) are third-party service providers that are deemed to be critical in terms of the ICT services they provide to the financial sector.
DORA will put in place a joint oversight framework for providers deemed critical. The overall objective is to strengthen and align digital operational resilience across the different European Union financial areas.
Each of the three European Supervisory Authorities (EBA, EIOPA and ESMA) will act as Lead Overseers and have the power to monitor on a pan-European scale the activity of CTPPs in the context of the ICT services they provide to financial entities in the scope of DORA.
▸ More information in the DORA section
Regulation
The Digital Operational Resilience Act (DORA) entered into force on 16 January 2023 and will apply as of 17 January 2025.
ICT third-party providers who provide ICT services to financial entities and are designated as critical (critical third-party providers - CTPPs), will be subject to an EU oversight framework.
The oversight framework assigns to the three European Supervisory Authorities - ESAs (i.e. European Banking Authority – EBA, European Securities and Markets Authority - ESMA, European Insurance and Occupational Pension Authority - EIOPA) the role of Lead Overseer, to ensure that CTPPs are adequately monitored on a Pan-European scale, for the risks that they may pose to the EU financial sector.
