Push to Empower ESMA Gains Momentum as Europe Confronts Splintered Supervision

Key Takeaways

• ESMA Authority: The AMF’s Marie-Anne Barbat-Layani calls for ESMA to gain direct supervisory powers over large cross-border entities, including major asset managers, market infrastructures, and global crypto firms.
• Fragmentation Risk: She argues that supervision split across 27 national regulators creates inconsistent enforcement, fuels “red tape,” and undermines investor protection and competitiveness.
• Crypto Stress Test: Early experience with MiCA authorizations shows how hard it is to maintain uniform supervision of cross-border crypto providers, enabling regulatory “forum shopping.”
• Complementary Roles: Barbat-Layani maintains that national regulators would remain central for product supervision and market abuse detection, even if ESMA took on direct oversight of the largest entities.
• Competitiveness Agenda: Her proposal aligns with calls from Enrico Letta and Mario Draghi to simplify Europe’s supervisory landscape as part of a broader push to strengthen EU financial resilience and competitiveness.

Deep Dive

Europe wants deeper capital markets, more private investment, and a financial system that can compete globally. But one of the bloc’s leading regulators is warning that the EU is trying to build that future on an outdated supervisory map.

In an op-ed published in the Financial Times on December 1, 2025, Marie-Anne Barbat-Layani, chair of France’s markets watchdog, the Autorité des Marchés Financiers (AMF), argues that the European Securities and Markets Authority (ESMA) should no longer be limited to coordination and technical standards. Instead, she says, ESMA should directly supervise the largest cross-border players in EU markets, including major asset managers, pan-European market infrastructures, and global cryptoasset providers.

Her argument starts with a gap that has widened over the past decade. Europe has pushed hard to finance more of its economy through markets rather than banks, yet supervision remains mostly national. Market-based finance now accounts for around half of international finance, but for the largest groups operating across multiple jurisdictions, there is still no single authority clearly in charge of consolidated oversight.

That disconnect feeds into broader concerns in Brussels, such as red tape and regulatory fragmentation. A single EU rulebook does not mean uniform enforcement. Divergent interpretations across 27 countries can undermine investor protection, distort competition, and require overly detailed regulations to compensate for supervisory differences.

Crypto as a Stress Test for a Fragmented System

Barbat-Layani points to crypto markets to show how that structure struggles under pressure. Crypto activity moves across borders by default, yet ESMA currently has no direct power to supervise providers. Under the EU’s Markets in Crypto-Assets Regulation (MiCA), a firm licensed in one country can serve customers everywhere in the Union. But each national regulator must build expertise independently, and early authorization experiences suggest keeping everyone aligned is far from straightforward.

The risk, she warns, is a system where firms “shop around” for the lightest interpretation, a form of regulatory forum shopping that both weakens EU credibility and creates unnecessary exposure.

Barbat-Layani is also clear that stronger powers for ESMA do not mean sidelining domestic watchdogs. National regulators would remain closest to their markets, best placed to supervise products and detect abuse. They would also continue to shape ESMA governance. The shift she proposes is one of balance: ensuring that the biggest and most interconnected players are overseen at the level where their impact is felt.

A Chance to Strengthen Competitiveness Without a Crisis

Her call lands in the middle of a wider policy rethink about Europe’s economic competitiveness. Reports by Enrico Letta and Mario Draghi have underscored how fragmented supervision constrains the ability of large European players to rationalize operations across borders. That inefficiency, Barbat-Layani argues, is a drag Europe can no longer afford.

She notes that historically, the EU has waited for turmoil to expose structural flaws before taking action, citing past financial crises as the drivers of supervisory reform. This time, she suggests, Europe should move first. A clearer allocation of responsibility, faster responses to emerging risks, and more predictable enforcement would all strengthen confidence in European markets.

The choice, as she frames it, is whether the EU continues relying on slow convergence among 27 supervisors or acknowledges that some entities are now too cross-border, too systemically important, and too central to Europe’s economy to remain outside ESMA’s direct purview.

Her conclusion is that if Europe wants markets that are effective, secure, and globally competitive, giving ESMA direct supervisory authority over its largest cross-border players is not optional, it is overdue.

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