Brussels Considers Giving ESMA Direct Oversight of EU Trading Platforms

Brussels Moves Toward a Unified Regulator

The European Commission is drafting plans to bring stock and cryptocurrency exchanges under central supervision in an effort to streamline regulation and strengthen the bloc’s financial competitiveness against the United States. The proposal, first reported by the Financial Times, would hand the European Securities and Markets Authority (ESMA) direct oversight of stock and crypto trading platforms, asset managers, and other market infrastructure.

The plan forms part of the EU’s long-running “capital markets union” agenda, which aims to integrate fragmented national markets into a single European capital base. A draft is expected in December, according to people familiar with the matter.

Europe’s current regulatory structure relies heavily on national authorities, creating inconsistencies and added costs for firms operating across borders. The new approach would mirror the U.S. Securities and Exchange Commission’s model, centralizing supervision of both traditional and digital assets.

Investor Takeaway

Lagarde Endorses a “European SEC”

The proposal has received backing from senior European officials including European Central Bank President Christine Lagarde, who in November 2023 described the idea of extending ESMA’s mandate as a potential solution to systemic risks from large cross-border firms. “Creating a European SEC, for example, by extending the powers of ESMA, could be the answer,” Lagarde said at the European Banking Congress. “It would need a broad mandate, including direct supervision.”

Under the draft framework, ESMA would also gain authority to issue binding decisions in disputes between asset managers and could become the final arbiter on market conduct cases. The move would mark a major step toward reducing regulatory fragmentation that critics say undermines liquidity and competitiveness across Europe’s exchanges.

France Pushes Back on Passporting

The initiative comes amid growing tension over how national regulators apply the Markets in Crypto-Assets Regulation (MiCA). France’s Autorité des marchés financiers (AMF) warned in September that it may block “passporting,” a mechanism allowing crypto companies licensed in one EU state to operate across all 27 member nations. The French proposal reflects concerns that firms might exploit weaker oversight in smaller jurisdictions.

France joined Austria and Italy in calling for ESMA to take over direct supervision of major crypto firms, a position that aligns with the Commission’s new proposal. Under MiCA, which took effect for service providers in December 2024, the passporting system was intended to encourage innovation and harmonize standards. However, some policymakers now argue it has instead exposed regulatory blind spots.

Investor Takeaway

Next Steps for ESMA

Verena Ross, ESMA chair, confirmed in October that the Commission was preparing legislation to transfer parts of financial sector oversight to the agency. She said the effort aims to address “continued fragmentation in markets” and move toward a single capital market for Europe.

If adopted, the expansion would place ESMA at the center of EU market regulation—overseeing not only equity and bond trading but also emerging crypto-asset platforms. Supporters argue that centralizing supervision could attract global investors by improving consistency and enforcement quality. Critics counter that it risks creating a cumbersome bureaucracy detached from local markets.

The Commission’s draft will be published in December, after which negotiations with the European Parliament and member states are expected to begin in early 2026. Any final framework would likely require several years of phased implementation across the bloc.