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The EU Supervision, Crisis Management and Resolution Authorities: New Supranational Powers and Constitutional Law LimitsJonathan Overett Somnier, Head of Legal Unit
Law, Justice and Development Week 2014, World Bank, October 2014
EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 2
Overview
Some legal background
European System of Financial Supervision
EBA’s role, powers & governance
A legal update
Conclusions
EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 3
Legal position of agencies in the EU
Longstanding view – EU institutions can do more than agencies, ‘policy’ reserved to institutions
Meroni (Case 9/56) – Can delegate clearly defined executive powers if subject to strict review in the light of objective criteria determined by delegating authority
Arts 290 and 291 TFEU – delegation of quasi-legislative/implementing powers to Commission/Council (not agencies)
Arts 263, 265, 267 and 277 TFEU establish framework for judicial review of agencies’ acts, including acts of general application
European System of Financial Supervision
Supervision
European Banking
Authority
European Insurance and Occ. Pensions Authority
European Securities
and Markets Authority
Joint Committee
Macro-prudential
European Systemic
Risk Board
EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 4
National supervisory authorities(Banking)ECB SSM
plus
ECB & national central banks
Representation
Harmonisation of regulation and supervision
EU
National & Eurozone
EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 5
The EBA’s objectives
Protect the public interest by contributing to the short, medium and long-term stability and effectiveness of the financial system, for the Union economy, its citizens and businesses
By contributing to:
sound, consistent, effective level of regulation
ensuring integrity, transparency, efficiency and orderly functioning of financial markets
strengthening international supervisory coordination
preventing regulatory arbitrage and promoting equal conditions of competition
ensuring the taking of credit and other risks are appropriately regulated and supervised
enhancing customer protection
Treaty base: Article 114 TFEU – measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market
EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 6
The EBA’s powers
Technical standards
Temporary prohibitions and
restrictions
Dispute settlement
Emergency situations
Guidelines and recommendations
Breach of Union law investigations
Opinions to EU institutions / supervisors
Warnings Peer reviews
Participation in colleges
Stress tests
Data collection
EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 7
The single rulebook / handbook illustrated
Capital Requirements
Directive
Guidelines on remuneration
Guidelines on supervisory
review process
Single Supervisory Handbook
RTS on identified staff
RTS & ITS on passporting
LegislatorsBinding
EBA technical standards
Binding
EBA guidelines
Comply/explain
EBA handbook
Non-binding – use
EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 8
Governance
• Full-time staff member• Chairs BoS (non-voting) and MB• Represents the EBA in Joint Committee
Chair• Full-time staff member• Manages the EBA• Implements work programme
Executive Director
• Guides work of the ESA• Adopts main regulatory/supervisory products• Composition – see next slide
Board of Supervisors
• Ensures ESA’s mission is carried out, and work programme implemented
• 6 members of BoS plus Commission repManagement Board
• EBA at end 2014 – 111 temporary agents, 15 contract agents, 17 secondeesStaff
EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 9
Board of Supervisors
EBA BoS
EBA Chairperson
Heads of 28 national
supervisors (voting)
European Commission
ECB Supervisory Board – Single
Supervisory Mechanism
European Systemic Risk
Board
ESMA & EIOPA
Observers (EEA EFTA authorities, Single Resolution
Board)
Accompanying representatives (eg resolution authorities)
EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 10
Voting in the Board of Supervisors
Develop draft technical standards QMV+Double SMV
Guidelines and recommendations QMV+Double SMV
Breach of Union law recommendations Panel proposesSMV+Double SMV
Emergency decisions SMV+Double SMV
Binding mediation decisions Panel proposesSMV+Double SMV
Opinions SMV
Temporary prohibition and restriction decisions
SMVQMV+Double SMV if requested to reconsider
Appointment of mediation panel ¾ majority
Any other Board decision SMV
EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 11
Meroni revisited
Short-selling (UK v European Parliament and Council, Case C-270/12)
ESMA’s power to temporarily ban short-selling of certain stocks when financial stability threatened considered lawful
Powers require deployment of specific technical and professional expertise
Within bounds of regulatory framework establishing in founding regulation
Discretion limited by conditions and criteria and by temporary nature
Part of series of rules endowing national and EU authorities with intervention powers
EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 12
Conclusions
Role of agencies in the European Union
Relationship with national bodies
Relationship with Union institutions/bodies
EUROPEAN BANKING AUTHORITY
Tower 42, 25 Old Broad StreetLondon EC2N 1HQ
Tel: +44 2073821770Fax: +44 207382177-1/2
E-mail: [email protected]://www.eba.europa.eu
