ESMA Assesses German Financial Reporting System After Wirecard Collapse

The European Securities and Markets Authority (ESMA ESMA European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t European Securities and Markets Authority (ESMA) is an independent Authority of the European Union that is responsible for the safety, security, and stability of the European Unions’ financial system and is charged with protecting the public. The European supervisory authority for the securities sector, ESMA was established on 1 January 2011. The European Securities and Markets Authority is an independent EU authority based in Paris. It aims to contribute to the effectiveness and stability of t Read this Term) announced today it is to launch an assessment of the supervisory response in the financial reporting area by BaFin and the Financial Reporting Enforcement Panel (FREP) to the events leading to the collapse of Wirecard AG. The assessment will be completed by 30 October 2020, according to the regulator.

ESMA said that high quality financial reporting is core to investor trust in capital markets and Wirecard’s collapse has undermined this trust. It explained that it is therefore necessary to assess these events to help in restoring investor confidence.

Peer Review Assessment

ESMA noted that the assessment will focus on the application of the Guidelines on the Enforcement of Financial Information (GLEFI) by BaFin and FREP, the designated competent authorities for the supervision and enforcement of financial information in the Federal Republic of Germany under the Transparency Directive (TD).

The fast-track assessment will be conducted using GLEFI and ESMA’s Peer Review Methodology, within a compressed timeframe. The peer review tool has been chosen as the TD only contains high level principles regarding financial reporting and its supervision, and the IAS Regulation Regulation Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Like any other industry with a high net worth, the financial services industry is tightly regulated to help curb illicit behavior and manipulation. Each asset class has its own set of protocols put in place to combat their respective forms of abuse.In the foreign exchange space, regulation is assumed by authorities in multiple jurisdictions, though ultimately lacking a binding international order. Who are the Industry’s Leading Regulators?Regulators such as the UK’s Financial Conduct Authority ( Read this Term is not included in the list of acts for which ESMA may launch a Breach of Union Law investigation.

Guidlines on the Enforcement of Financial Information

ESMA issued the GLEFI in 2014, on its own initiative, to promote consistent application and supervision of IFRS and in 2017. In support of this work, ESMA conducted a peer review with onsite visits in seven Member States.

The review focused on three GLEFI guidelines – Guideline 2 Human and financial resources, Guideline 5 Selection Methods and Guideline 6 Examination procedures. It identified significant differences in national approaches, resources allocated, and actions taken in relation to enforcement of financial information. The review included BaFin and FREP and, while the country specific report highlighted positive aspects of the German enforcement model, it also identified areas for improvement. These included:

1. the procedures in place in both FREP and BaFin;
2. the selection and examination of issuers;
3. independence and conflict of interests in FREP; and
4. cooperation between the two authorities.

ESMA revealed it also invited BaFin and the European Commission, in the country-specific onsite report, to investigate whether the TD is correctly transposed by Germany, given BaFin’s self-declared inability to comply with the GLEFI due to a lack of enforcement powers.

ESMA said that, in view of the overriding public interest in this particular case and the enforcement of financial reporting in Germany, it is making the confidential country report on Germany which formed part of the 2017 Peer Review available.

Today’s announcement followed a European Commission letter, on 25 June, inviting ESMA to conduct a fact-finding analysis of the events leading up to the collapse of Wirecard AG.