Supervisory Convergence Tools
Supervisory convergence tools help ensure that national competent authorities (NCAs) apply rules in a consistent and effective way, and that the authorities act in a coordinated manner across the Union.
Aligned with its risk-based, outcome-focused and data-driven approach, ESMA selects the most appropriate tools to achieve effective supervisory convergence outcomes, focusing on the key risks identified. By applying these tools, ESMA aims to ensure that both NCAs and market participants operate within a harmonised supervisory framework.
ESMA categorises its supervisory convergence tools under five main objectives:
Identify and prioritise risks
ESMA identifies existing, emerging or growing EU-wide supervisory risks. This allows ESMA to prioritise its supervisory convergence work and help guide the supervisory priorities of NCAs. Tools in this category support ESMA and NCAs to direct their efforts and resources towards the risks that pose the greatest potential impact on investor protection, financial stability and the orderly functioning of financial markets.
▸ Examples: Risk Prioritisation Exercises, Union Strategic Supervisory Priorities (USSPs), European Common Enforcement Priorities (ECEPs)
Develop effective and consistent supervisory practices
ESMA builds common and consistent supervisory methods together with NCAs. These tools play a key role in ensuring that NCAs are equipped with the relevant common baseline to carry out supervision on the ground in a similar manner and/or targeting consistent supervisory outcomes.
▸ Examples: principles*, opinions, statements, warnings, guidelines, Q&As, supervisory case discussions, manuals, supervisory briefings*.
Undertake supervisory work
ESMA facilitates supervisory activities being carried out in a coordinated and collaborative manner across NCAs. Where relevant, ESMA may also take on delegated supervisory tasks and intervene directly in certain national supervisory activities. These tools support more integrated supervisory actions and contribute to the implementation of consistent supervisory approaches on the ground.
▸ Examples: Common Supervisory Actions, coordinated mystery shopping exercises, coordinated data quality frameworks, supervisory colleges, joint groups, delegation of tasks to ESMA, product intervention measures, opinions validating NCA's approaches.
Assess and remediate
ESMA evaluates how consistently and effectively supervisory practices are applied across different jurisdictions. When specific issues arise, ESMA also ensures that supervisory responses are timely and well-targeted. Through this work, ESMA aims to address issues it identifies to strengthen supervisory approaches across the EU in a forward-looking manner.
▸ Examples: peer reviews, Article 16 recommendations, mediation, breach of Union Law investigations.
Increase common knowledge
ESMA actively promotes peer learning and exchange of experience among supervisors. ESMA also contributes to building supervisory capacity across the EU. When relevant, ESMA can take stock of existing practices to enhance NCAs’ supervisory insights. These activities play an important role in fostering peer exchange, collective learning and contributing to the development of a common supervisory culture in the EU.
▸ Examples: ESMA Groups discussions, staff exchanges, collection of evidence, trainings, technical assistance.
ESMA and NCAs often use a combination of tools from different categories to address complex convergence issues and reach ambitious outcomes. Tools can complement each other and are used to follow up on the effectiveness of the convergence initiatives and identify residual risks to be addressed.
