ESMA Balances Expanding Mandate With Push for Simpler Regulation

Key Takeaways

• Supervision Remained Central: ESMA said it advanced work on MiCA, DORA and EMIR 3 during 2025.
• Simplification Was A Major Priority: The authority focused on reducing unnecessary burden, including through reporting reforms.
• Sustainable Finance Oversight Expanded: ESMA worked on ESG disclosures, greenwashing risks, the Green Bond Regulation and ESG Rating Regulation.
• Market Infrastructure Reforms Progressed: The first consolidated tape providers were selected and work continued on T+1 settlement.
• Digital Innovation Stayed On The Agenda: ESMA increased its work on AI, distributed ledger technology and decentralized finance.

Deep Dive

The European Securities and Markets Authority said its work in 2025 centered on strengthening supervision, reducing unnecessary regulatory burdens and supporting innovation across the European Union’s financial markets, as the bloc continued work on its Savings and Investments Union agenda.

In its 2025 annual report, the EU markets regulator and supervisor said it made progress on major regulatory files including the Markets in Crypto-Assets Regulation, the Digital Operational Resilience Act and reforms to the European Market Infrastructure Regulation.

The report was published against what ESMA described as heightened global uncertainty and continuing debate over how to make EU capital markets more orderly, resilient and attractive to investors.

“2025 was a pivotal year for Europe’s capital markets, with momentum shifting from policy ambition to concrete action,” ESMA Chair Verena Ross said. She said the authority worked with national competent authorities on MiCA implementation and made “substantial progress” on simplification and burden-reduction projects.

New Mandates Move Into Practice

ESMA said it played a key role in implementing several major EU legislative frameworks during the year, including MiCA, DORA and EMIR 3.

The work included supporting supervisory convergence, advancing the authorization of crypto-asset service providers and strengthening digital resilience across the financial sector. ESMA also said it helped enhance supervision of clearing infrastructure, including recognition and risk assessment of third-country central counterparties.

The authority said those efforts reinforced the resilience of the EU financial system. ESMA also continued work on sustainable finance. The regulator said it focused on improving ESG disclosures, addressing greenwashing risks and implementing new regulatory frameworks, including the Green Bond Regulation and the ESG Rating Regulation.

Under the Green Bond Regulation, ESMA established a supervisory framework for external reviewers. The authority said the measures were intended to promote transparency, investor protection and trust in sustainable finance markets.

Simplification Takes Priority

Alongside its expanding supervisory work, ESMA said regulatory simplification and burden reduction were central priorities in 2025. The authority pointed to a strategic approach to supervisory reporting, including initiatives to streamline transaction reporting and fund reporting under the Alternative Investment Fund Managers Directive and UCITS framework.

ESMA also launched a retail investor journey initiative aimed at making the investment process simpler and more transparent while ensuring investors have access to clear, reliable and accessible information.

The simplification push comes as European policymakers weigh how to deepen capital markets integration without adding unnecessary complexity for market participants.

Market Data and Settlement Reforms Advance

ESMA said one of the year’s major milestones was the selection of the first consolidated tape providers under MiFIR, a step intended to improve the transparency and accessibility of market data across the EU. The authority also supported work toward a shorter T+1 settlement cycle, part of wider efforts to improve post-trade efficiency and reduce systemic risk.

“These initiatives support broader efforts to improve the functioning and competitiveness of EU capital markets,” ESMA said.

Digital Finance Remains a Focus

The regulator said it intensified its work on digitalisation during the year, including artificial intelligence, distributed ledger technology and decentralized finance. ESMA said the goal was to support innovation while safeguarding market integrity and investor protection.

Natasha Cazenave, ESMA’s executive director, said the authority had reached important milestones in 2025, citing progress on T+1 settlement, consolidated tape providers and the implementation of new regulatory frameworks including the Green Bond and ESG Rating regulations.

She also said ESMA welcomed the potential changes being discussed by EU co-legislators through the Markets Integration and Supervision Package and was ready to take on new responsibilities.

“ESMA stands ready to take on new responsibilities and contribute to a more integrated and effective supervision in the European Union,” Cazenave said.

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