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Europe Plans Major Shift of Financial Supervision to a Single Watchdog

By  |  November 13, 2025
European Commission, banking regulation, Basel III

The European Union is preparing a sweeping overhaul of its financial-supervision framework that would shift major regulatory powers from national capitals to the bloc’s markets watchdog. According to Bloomberg, the European Commission is finalizing a package of reforms that would significantly expand the authority of the European Securities and Markets Authority (ESMA), giving it direct oversight of large clearing houses, depositories, key trading platforms, and all crypto-asset firms operating in the bloc.

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    Draft proposals circulated to EU officials ahead of a planned announcement next month outline how Brussels intends to reshape ESMA into a far more robust supervisor—closer in scope to the U.S. Securities and Exchange Commission. Per Bloomberg, the plan includes the creation of an independent executive board to oversee the restructured agency, enhancing its autonomy nearly 15 years after ESMA was originally set up to coordinate national regulators and establish common standards following the global financial crisis.

    Unlike the SEC, which directly regulates broad areas of U.S. markets, ESMA’s current role is comparatively limited, with direct authority only in specific niches, such as rating agencies and trade repositories. The proposed changes would mark the first major shift toward centralized financial supervision in the EU, a move strongly supported by France and several EU institutions but met with resistance from member states wary of relinquishing national control. Companies have also raised concerns about the impact of an additional supervisory layer.

    The Commission’s ideas, which remain under discussion, would still need to be negotiated with both the European Parliament and the Council of the EU. According to Bloomberg, the Commission has so far declined to comment on the emerging framework.

    Key elements of the draft package include the introduction of a new “pan-European market operator” label that would allow certain firms to operate across the bloc with a single authorization. ESMA would gain direct supervisory powers over standalone crypto companies and enhanced authority over “significant” clearing counterparties, securities depositories, trading venues, and these newly designated pan-EU operators. Smaller entities would continue to fall under national regulators.

    The plan also seeks to reduce fragmentation across the EU’s regulatory landscape. ESMA would be empowered to pre-screen approvals from national authorities that have shown supervisory weaknesses, and more rules would be shifted from directives—implemented differently in each country—to directly applicable EU regulations.

    If adopted, the reforms would represent one of the most consequential shifts in Europe’s financial-governance model in over a decade, reflecting the bloc’s push to deepen its capital markets and strengthen oversight in rapidly growing sectors such as crypto.

    Source: Bloomberg