EU watchdog warns on risks to markets integration push

By the Editorial Team · Monday, October 5, 2026

The European Union faces challenges in unifying its capital markets as member states like Germany and Sweden seek exemptions from expanded supervision by the European Securities and Markets Authority (Esma). These disputes risk weakening efforts to create a more integrated and efficient financial market, even as Esma prepares to nearly double its staff and broaden its regulatory scope across the EU.

The European Union’s efforts to unify its capital markets risk being compromised if disputes among member states over supervisory responsibilities are not carefully managed, the bloc’s top financial regulator has warned. Verena Ross, chair of the European Securities and Markets Authority (Esma), expressed concern that prolonged negotiations could undermine the coherence needed to achieve greater market integration.

Ross, who is set to step down from her role at Esma this month after 15 years with the authority, cautioned that compromises during current reform discussions might dilute the objectives of creating a more integrated and efficient European financial market. “It is really important to keep the coherence of what is proposed and not end up, through compromises, effectively undoing the coherence of trying to achieve more integrated markets,” she said.

The European Commission has proposed expanding Esma’s mandate significantly, granting it responsibility over key financial entities currently supervised on a national basis. This expansion would extend Esma’s oversight to cross-border stock exchanges, market infrastructures, and crypto-asset firms, covering the EU’s 27 member countries. The reforms aim to strengthen the EU’s financial markets, which have historically lagged behind the United States in size and influence.

A proposed compromise under consideration in Brussels would allow Germany to exempt most of the Deutsche Börse Group, operator of the Frankfurt Stock Exchange, from Esma supervision unless certain market share thresholds are met. This exemption, which requires majority support from EU finance ministers, has drawn scrutiny from those advocating for a unified supervisory framework.

Similarly, Sweden is seeking to protect several stock exchanges it operates, which are owned by large multinational groups, from automatic Esma supervision. Ross highlighted the need for caution in how such exemptions are structured to avoid fragmenting the regulatory framework.

Ross noted the difficulty in predicting the final outcome of the reform process, emphasizing that the overall package extends beyond the status of individual trading venues. If implemented as envisaged, Esma’s staffing would nearly double to around 700 employees, reflecting its expanded responsibilities.

“We need to build that cross-European scale and integrate. And that means that our supervision needs to also match that ambition,” Ross said, underscoring the increasing cross-border nature of European financial markets and the need for consistent oversight to avoid conflicting instructions from multiple national supervisors.

Germany argues that Deutsche Börse primarily operates within its national borders, distinguishing it from pan-European rivals such as Euronext or Nasdaq, and contends this justifies an exemption from Esma’s direct supervision. However, Deutsche Börse’s holdings include Luxembourg-based Clearstream, a major central securities depository, and fintech firm SimCorp in Denmark, illustrating the group’s broader European footprint.

Reflecting on her tenure at Esma, Ross expressed regret that the authority had not moved more swiftly to reduce market fragmentation. She identified this challenge as a continuing priority for her successor, Carlo Comporti, who assumes the chairmanship at the end of the month.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.