Who will run the European Supervisory Authorities day-to-day? (Complinet)

January 18, 2011

By Peter Elstob, Complinet

Sometimes the crudest calculations can be the most helpful. Despite official protestations, it is a fairly safe assumption that the permanent positions that have been announced so far at the three European Supervisory Authorities have effectively been shared out among member states, with some weighting for their importance as financial centres. If a slightly shakier assumption is entertained, namely that the three executive directors, whose job it will be to run the ESAs’ day-to-day operations, will be chosen on a similar basis (although perhaps with individual qualities and qualifications playing a more important part), it is possible to make some educated guesses about the nationalities, and maybe the identities, of those who will fill these important roles.

Here is how the countries with more than one job already in the bag line up. The UK has two management board members (of the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority) and one deputy chairmanship (of the European Banking Authority). Germany has two management board members (ESMA and EBA). Luxembourg has one management board member (ESMA) and one deputy chairmanship (EIOPA). Italy has one management board member (EIOPA) and one chairmanship (EBA). Portugal has one chairmanship (EIOPA) and one deputy chairmanship (ESMA). With one chairmanship (ESMA) going to a Dutchman, this leaves three financially important countries with just one management board member each; France (EBA), Spain (ESMA), and Sweden (EBA).

Assuming the three proposed chairman are approved by the European Parliament – and guessing how member states regard their own relative financial importance – it is possible to draw some tentative conclusions.

The UK has got all the jobs it is going to get (although Verena Ross, who heads the FSA’s international division, is still mentioned in connection with ESMA).

Luxembourg, Portugal and Austria are very adequately represented.

Italy is adequately represented.

Sweden may not be adequately represented.

Germany may not (quite) be adequately represented.

With the appointment of Steven Maijoor from AFM, the Dutch markets supervisor, chairing ESMA, the Netherlands should be satisfied. It seems unlikely that one country could supply both a chairman and an executive director.

The great majority of countries that failed to secure a job — Bulgaria, Cyprus, Latvia, Lithuania, Malta, Romania, Slovakia, Slovenia — will not supply any of the executive directors.

So where does this leave us? First, it is apparent that the French and Spanish are owed one more job. France’s single management board membership looks particularly inadequate, and Spain, especially when compared to Portugal, also looks under-represented. Secondly, Italy, although having the EBA chairmanship and an EIOPA management board membership, might be considered under-represented in relation to its financial importance, again compared to Portugal. Thirdly, Sweden is financially important, has well-regarded regulators and supervisors, and one job may not be enough. Fourthly, two non-chair jobs may not be enough for Germany.

Finally, there are two glaring omissions from the job line-up so far: Greece and Belgium. For neither country to have won even a board membership must immediately put them in the frame for an executive directorship. As a result of all this semi-scientific analysis, we can say that the executive directors are likely to come from three of the following: France, Spain, Belgium, Greece. Less likely but possible, one executive director could be Italian, Swedish or German.

As it happens, Italy, Greece and Belgium have all cropped up in speculation around the staffing of ESMA. Carlo Comporti, an Italian national, is acting secretary general of ESMA, having been secretary general of its predecessor, the Committee of European Securities Regulators, and is reportedly interested in becoming ESMA’s executive director. Maria Velentza, a Greek national, heads the European Commission’s securities markets unit within DG Internal Market and Services, and is believed to have applied for the ESMA job. Until Maijoor’s surprise appointment, the smart money on the ESMA chairmanship was on Jean-Paul Servais, who chairs the Belgian regulator.

At this point, as so often with speculation about multilateral negotiations behind closed doors, the ifs and buts kick in. Comporti has been a competent ‘chief executive’ of CESR, but it is moot whether Italy does not, in fact, already have adequate representation with its EBA chairmanship and EIOPA board membership. Velentza certainly has the requisite background in steering securities policy and legislation at DG Markt, but it would be a departure, and probably a controversial one, for a commission bureaucrat to end up running a European agency, which is what ESAM and the other authorities are. Servais sought the ESMA chairmanship, but may not wish to serve as its executive director. As for the other two ESAs, there seems to be even less credible information to rely on.

Peter Elstob  (Peter.Elstob@thomsonreuters.com) is a correspondent for Complinet.Complinet, part of ThomsonReuters, is a leading provider of connected risk and compliance information and on-line solutions to the global financial services community. Established in 1997, Complinet serves over 100,000 industry professionals in 80+ countries. Its connected approach provides one single place to get all the relevant regulatory news, analysis, rules and developments from the region to support firms in highly regulated industries.

What it generally agreed, however, is that all three authorities are anxious to have their entire leaderships in place as soon as possible, and certainly inside the first quarter, so they can become fully operational and achieve the momentum they will need if they are to meet the high expectations that politicians, national regulators and all sides of industry have of them.

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