Following from the Bulgarian Presidency in the first half of 2018, as from 1 July Austria has taken over as the Presidency of the Council of the European Union, for the second half. During its Presidency, Austria intends to take on the role of bridge builder in Europe and reduce the tensions that have recently arisen. Under the motto of “A Europe that protects”, the Austrian Government will focus on the following priorities during its Presidency: security and the fight against illegal migration, securing prosperity and competitiveness through digitalisation, and stability in the European neighbourhood. Within the programme of the Austrian Presidency the section on the Economic and Financial Affairs Council is headed “A stable and strong euro area and fair and efficient taxation”. This includes paragraphs on completing the Banking Union and developing a Capital Markets Union; deepening and strengthening economic policy coordination; improving efficiency and fairness in taxation; and provision of financial resources – 2019 EU budget.

The former of these reports states that with respect to the Banking Union, the Presidency will focus on further risk reduction measures, as progress in this area is a prerequisite for resuming discussions on further risk sharing measures - first and foremost, the Presidency will strive for an agreement on the Banking Package (risk reduction measures) presented by the European Commission in November 2016, which already addresses a number of important objectives outlined in the ECOFIN roadmap of June 2016 on risk reduction measures. Also, with respect to the numerous other topics related to financial services, the Presidency will do its best to achieve significant progress and finalise dossiers. The Presidency will

also ensure an appropriate follow-up to the Commission’s FinTech Action Plan (and the respective conclusions of the ECOFIN Council), with a particular focus on opportunities and risks of virtual assets and on regulatory and supervisory measures that may become necessary in this context. Finally, the Presidency will also advance the building of CMU, thus contributing to innovation and competitiveness, employment and growth.

Within the programme, it is also observed that the complex Brexit negotiations, the Withdrawal Agreement and the terms on the transition period as well as the Political Declaration on the framework for future EU-UK relations associated with the Withdrawal Agreement have to be finalised by autumn 2018 – to ensure the UK’s orderly withdrawal from the EU on 30 March 2019. In this context, the Presidency will focus on maintaining the unity of the EU27, and on laying the foundations for a positive and successful relationship with the UK after its withdrawal. It is also stated that the Withdrawal Agreement must provide for strong guarantees and controls as well as protections for the citizens’ rights; and that the Presidency’s goal is a constructive and forward-looking relationship with the UK, which requires a level playing field and a reasonable balance between rights and obligations.

On 3 July, Austria’s Federal Chancellor, Sebastian Kurz, presented the Presidency at a plenary session of the European Parliament, in Strasbourg. European Commission President, Jean-Claude Juncker, and the leaders of the major political groups urged Sebastian Kurz to pursue work on asylum reform, the euro area and the creation of a European Monetary Fund. Priority should also be given to discussing proposals for the EU’s new long-term financial framework in the Council, in order to reach an agreement with Parliament before the EU elections in May 2019, they added. Austrian Presidency kick-off meetings with Coreper I and Coreper II took place on 4 July, in Brussels, and a visit of the College of Commissioners, to Vienna, was arranged for 6 July.

In April, as reported in this section of Issue no 50 of the ICMA Quarterly Report, a draft European Parliament own initiative report was published, on the topic of relationships between the EU and third countries concerning financial services regulation and supervision. Subsequently, an 11 July ECON vote provided a very significant majority for a final version of this own initiative report, which has been published, dated 18 July.

ESMA published its 2019 Annual Work Programme, dated 26 September. In its initial set-up period, from 2011 up to 2015, ESMA focused on building a single rulebook for EU financial markets and on establishing itself as a credible direct supervisor. In accordance with ESMA’s Strategic Orientation 2016-2020 ESMA has now shifted its focus onto its other two activities: supervisory convergence and assessing risks in the financial markets. In 2019, ESMA will continue on this line, as well as fulfilling its responsibilities stemming from the initiatives of the CMU.

In addition, ESMA will be taking on new direct supervisory responsibilities under the SFTR and the Securitisation Regulation, as well as new supervisory convergence powers and responsibilities under European funds’ Regulations. Moreover, ESMA is planning to support sustainable finance through a set of priority actions.

With regard to ESMA’s existing mandates, major work streams for 2019 include supervisory convergence work in the areas of the prospectus and securitisation regulations. Continued implementation of MiFID II and MiFIR will be a point of focus, in particular to meet the increasing demand for effective supervisory convergence, to analyse and manage the related data requirements, and to provide advice to the Commission on the retention or the review of the new requirements. ESMA will also work on the third country regime under MiFIR including, among other tasks, support to the Commission on equivalence assessments and concluding co-operation arrangements with third countries.

As European regulator and supervisor of specific financial entities, ESMA will persistently and prudently continue its work in 2019 to support a smooth and resilient withdrawal of the UK from the EU. This withdrawal will make demands on ESMA, and NCAs, in terms of supervisory convergence work and financial stability work, as well as third-country policies. And ESMA will continue its preparedness planning based on all scenarios, including a no-deal scenario.

Finally, during 2017, the European Commission made two legislative proposals that, if approved by the co-legislators in 2018, would significantly affect ESMA’s planning environment for 2019. First, the proposed amendment to EMIR aims to enhance the supervision of third-country CCPs and make the supervision of EU CCPs more coherent. Second, in September 2017, an amendment to ESMA’s founding Regulation, as part of a wider review of the ESFS, was proposed. This proposal would set up a new governance and funding structure for ESMA, as well as new objectives, tasks and powers.

Contact: David Hiscock david.hiscock@icmagroup.org