16/12/2025
ASKED
Does Europe need a central financial supervisor?
Interview with Thomas Richter, CEO of the German Investment Funds Association BVI
The European Commission wants to harmonise financial supervision – and is considering a central supervisory authority that could directly oversee major market participants. This task shall be assigned to ESMA. It sounds like less bureaucracy and more harmonisation within the EU. But is that really the case? Thomas Richter believes that a centralised supervisory authority for asset managers would create more problems than it solves.
Mr Richter, where does the current debate about a centralised financial supervision at EU level come from?
The initiative originates from France – coincidentally the seat of ESMA. The EU Commission has taken up this idea and wants to ‘regulate into existence‘ an EU capital market through a central supervisory authority. I am sceptical whether this will work. Centralised supervision does not create a single market. Nor have I heard any proposal for centralising insurance supervision under EIOPA, which is based in Frankfurt. If we want a European capital market, we have to start with the market itself, not with the supervisory authority.
What would such a ‘super supervisor‘ actually mean in practice?
Currently, ESMA is supposed to supervise certain cross-border market participants, including central securities depositories and central counterparties. Furthermore, it is required to audit asset managers operating across the EU that manage at least EUR 300 billion assets under management (AuM) at group level at least once a year. Additionally, ESMA will also be able to continuously monitor supervisory practices in cross-border transactions and issue recommendations to national supervisory authorities if deficiencies or inconsistencies are identified. If necessary, ESMA can also take direct action. These plans could later lead to centralised supervision of asset managers as well.
Could joint supervision help to deepen the European single market?
No, because EU law in the fund sector does not consist largely of regulations, but rather of directives that have been implemented into national law in different ways. A mega-authority in Paris would completely lack practical relevance and proximity to the companies it is supposed to supervise – not to mention the many languages within the EU. Moreover, the single market in asset management works very well. Around two-third of all UCITS – such as equity and bond funds – are marketed cross-border in at least one EU country. The industry successfully uses European product and company passports. Discussions about centralising supervision therefore seem like a solution in search of a problem. Problems would only arise with centralised supervision.
In what way?
Because centralisation would be inefficient and expensive. Large asset managers will face additional costs, including those for ESMA’s annual review. Moreover, national supervisory authorities will not disappear or reduce their fees, even if proponents of centralisation pretend otherwise. BaFin and other NCAs will still be needed because Member States have different rules. For example, the UCITS Directive, the AIFM Directive and MiFID have all been implemented differently into national law. That is intentional, as different markets have different requirements and traditions. In addition, asset managers must comply with national laws that ESMA could not take into account in its supervisory activities. As long as there are national specificities, there will be national supervisors. An additional central authority would only lead to duplicate structures, multiple reporting obligations and hundreds of new EU officials at ESMA. Bureaucracy would grow rather than shrink – not to mention the costs.
What would be the better solution from your perspective?
We do not need a another authority, but better cooperation. ESMA should expand its coordination role – for example, as a data hub for national supervisors or with a clear competition mandate to secure Europe's attractiveness as a location. Above all, the EU should simplify regulation. The massive flood of regulations from Brussels is the real problem for the industry.
Questions by Christiane Lang, Internet Editorial Team.