The EU's financial markets regulator, the European Securities and Markets Authority (ESMA), has released a follow-up report on the progress that the National Competent Authorities (NCAs) have made in improving their practices. The report follows the findings and recommendations from a peer review conducted by ESMA in 2017.

The NCAs, which were reviewed, CySEC, HCMC, CBI, AFM, and ATVP, have made progress in improving their supervisory framework and undertaking investigations, the regulator said. CySEC, HCMC, CBI, AFM, and ATVP are the financial regulators in Cyprus, Greece, Iceland, the Netherlands, and Slovenia, respectively.

ESMA Assesses Market Regulators

ESMA's peer review assessed the competency of the NCAs based on their compliance with certain aspects stated in the Markets in Financial Instruments Directive (MiFID I), a regulation that aims to harmonise rules on investment services in the EU. Additionally, the directive aims to protect investors and promote fair, transparent, and integrated financial markets.

"The follow-up peer review identifies that all NCAs have made progress since the last peer review in addressing points of partial or insufficient compliance," ESMA stated. "The NCAs have strengthened supervisory practices."

However, the authority made some recommendations, specifically for CySEC and the CBI. CySEC should consolidate its supervisory approach, while the CBI should integrate all the aspects of ESMA's guidelines on compliance, the regulator explained. Additionally, ESMA recommended that the CBI should strengthen its controls on compliance of non-banking investments.

Further Guidelines

Besides that, the regulator has urged the NCAs to continue monitoring how effective their supervisory practices are in light of ESMA's guidelines, which broadly focus on compliance, monitoring, reporting, and advisory obligations.

In a separate report issued by ESMA yesterday (Wednesday), the regulator released the guidelines for lending securities to retail clients, Finance Magnates reported. The guidelines outlined how securities companies should protect clients' funds.

The regulator wants the revenues made from the lending of securities to accrue to the retail clients after the securities firms have deducted their expenses. On top of that, ESMA issued guidelines on how the securities companies may use the assets of retail clients.