EU Financial Market Governance and the Covid-19 Crisis: ESMA’s Nimble, Responsive, and Speedy Response in Coordinating National Authorities through Soft-Law Instruments

The initial evidence indicates that EU financial market governance has performed well in its
response to the Covid-19 crisis. In the European Union (EU), the need for coordination and
cooperation over this crisis has been a particular concern given that national competent autho-
rities (NCAs) operate under the single rulebook and supervisory action must, accordingly, be
consistent. The European Securities and Markets Authority (ESMA) has, however, shown
itself to be nimble, responsive, and speedy in deploying its supervisory powers, including those
additional powers it has recently been granted under the 2019 ESA Reform Regulation. This
has particularly been the case as regards the application by NCAs of ‘supervisory forbearance’
and as regards the application of market disclosures rules, notably the financial reporting standard IFRS 9. ESMA has also been successful in coordinating the few NCAs which decided to
impose restrictions on short selling. ESMA’s actions during the Covid-19 crisis underline the de
facto power it wields through its soft supervisory convergence powers and the entrepreneurial but effective approach it deploys in their use.