ESMA published the work program for 2021. The work program sets out the work priorities and focus areas for the coming 12 months. The key work of ESMA in 2021 will include developing a retail investor base to support the Capital Markets Union, promoting sustainable finance and long-term oriented markets, dealing with the opportunities and risks posed by digitalization, strengthening the role of EU in global capital markets, and ensuring a proportionate approach to regulation.
The work program highlights that, across all activities, ESMA will be prepared to assist with new initiatives resulting from the Capital Markets Union action plan, the renewed sustainable finance strategy, the digital finance strategy, and the fintech action plan of EC. Building common approaches for incorporating environmental, social, and governance (ESG) factors into the supervisory practices of national competent authorities will be a priority for the work on supervisory convergence. To this effect, ESMA will produce a roadmap for supervisory convergence in sustainable finance, building on the sustainable finance strategy it published in 2020. ESMA also plans to assist EC with new initiatives resulting from the renewed sustainable finance strategy in the context of the recovery, to be adopted by EC by the end of the year. ESMA will continue its work on financial innovation by continuing its actions under the fintech action plan of EC and by contributing to the digital finance package.
In addition, the supervisory convergence priorities for 2021 will be to build an EU common risk-based and outcome-focused supervisory culture. ESMA expects to continue to foster convergence in the areas of liquidity risks in funds and the use of liquidity management tools by funds, following the work done in this area in 2020 in the context of COVID-19. ESMA will also foster convergence and commonly agreed actions to improve the quality and usability of data across the various reporting regimes. ESMA intends to contribute to the setup of high-quality corporate reporting standards, including standards for non-financial reporting and maintenance of an updated regulatory framework for digital reporting. In addition, ESMA will foster convergence in supervision over ESG reporting and usage of ESG data by capital market participants. In 2021, in the risk assessment area, ESMA will focus on integrating the new focus on financial innovation and ESG into its risk analysis.
ESMA plans to assess whether changes to the rulebook are needed to develop the Capital Markets Union, and/or to promote sustainable finance or proportionality. Under its direct supervision activity, in 2021, ESMA plans to prepare for new supervisory mandates regarding Benchmarks and Data Service Providers that will begin in 2022 as well as continue direct supervision in the areas of Credit Rating Agencies, Trade Repositories, and Securitization Repositories. ESMA plans to promote consistent application of the securitization regulation requirements and exchange of supervisory experiences and coordination among national competent authorities, particularly in the area of simple, transparent, and standardized (STS) securitization. ESMA will also actively monitor the application of requirements related to the European Single Electronic Format (ESEF), publish updates to support material whenever relevant, and consider if there is a need to provide new guidance to market participants. In 2021, ESMA also expects to work on peer reviews on supervision of cross-border activities of investment firms, national competent authorities' handling of relocation to the EU27 in the context of withdrawal of UK from EU, and supervision of central counterparties.
Keywords: Europe, EU, Banking, Securities, Work Program, COVID-19, Capital Markets Union, Sustainable Finance, ESG, NFRD, Securitization, Credit Rating Agencies, ESEF, ESMA
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