European agreement to establish a body with expanded powers to oversee stock exchanges
Amman3 min read
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European Union countries reached an agreement on Friday to strengthen the powers of the European Securities and Markets Authority (ESMA), in a reform considered crucial for boosting the continent's economy, following a compromise between France and Germany regarding the authority's powers and the scope of its oversight.
Ireland, which holds the rotating presidency of the Council of the European Union, announced that finance ministers meeting in Luxembourg approved a compromise formula by near-unanimous vote, with only Belgium abstaining.
The agreement provides for strengthening the capabilities of ESMA, which is based in Paris and currently has a role limited to coordination, to oversee major players in the sector at the expense of national financial market regulatory bodies.
At France's request, ESMA's decision-making capacity was strengthened and its relationship with national market regulators was clarified, enabling it to act effectively, especially in the event of a financial crisis.
In return, Germany secured an exemption for the "Deutsche Börse" group, the operator of the Frankfurt Stock Exchange, from the authority's oversight scope, which will include trading platforms, clearing houses, securities depositories, and entities operating in the cryptocurrency sector.
Berlin justified its position by arguing that the group, unlike "Euronext" which manages several European exchanges including Paris and Milan, does not have a cross-border scope of activity that justifies subjecting it to ESMA's oversight. The adopted criteria are scheduled to be reviewed in two years.
French Finance Minister Roland Lescure said, "We succeeded, after each of us showed flexibility in our position, in reaching a result that is in everyone's interest," hailing it as a "great day for Europe."
German Finance Minister Lars Klingbeil considered the agreement a "very important step" for investment and employment in Europe, expressing his "gratitude that everyone made concessions."
The European Commission, which proposed the reform in late 2025, believes that unifying market oversight is a fundamental step toward completing the "Savings and Investment Union," a project aimed at stimulating the European economy by directing thousands of billions of euros from savings deposited in bank accounts toward financing companies.
Irish Minister Simon Harris praised the agreement, considering it a "key step toward deepening the Savings and Investment Union, which enhances European competitiveness in the long term."
Several countries, including Ireland and Luxembourg, had criticized the project for fear of harming their interests, given the significant weight of the financial sector in their economies. However, Ireland worked in recent months to reach a compromise.
The 27 countries still need to negotiate with the European Parliament to reach a final agreement. European lawmakers have not yet finalized their position, while Brussels is pushing for the project to be approved by the end of the year, as part of efforts to complete the integration of the European single market.
