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EFAMA calls for better synchronisation between Level 1, 2 and 3 acts

26 May 2021 | Policy Position
supervision consultation

EFAMA has published its response to the European Commission’s targeted consultation on the supervisory convergence and the Single Rule Book, focusing on three areas for improvement.


Since its creation a decade ago, ESMA has played an increasingly important role in regulating EU capital markets by fulfilling its direct supervisory, regulatory and coordination mandates. As far as asset management activities are concerned, EFAMA believes ESMA’s track record can be further improved  through more efficient and effective use of ESMA’s existing powers.


EFAMA have identified three main areas for improvement that would further strengthen ESMA’s role at the centre of EU capital markets.


  • More time to prepare technical standards and guidelines: Given the urge to adopt new legislation in light of prevailing political priorities, ESMA is often not given enough time to consult both its own members and external stakeholders on very technical matters to a sufficient degree. As a result, ESMA’s Level 2 or Level 3 outputs are not always thorough, nor clear, leading to divergent interpretations between NCAs and market participants alike. Accompanying this is the excessive granularity of some Level 1 requirements - to the extent that ESMA cannot define critical technical details.
  • Ensure better synchronisation between Level 1, 2 and 3 acts: For ESMA to gain greater experience and credibility vis-à-vis EU capital market players, better synchronisation of the legislative process particularly between the European Commission (Level 1) and ESMA’s Level 2 and Level 3 work is critical. This can be achieved by allowing longer timelines or avoiding hard dates at Level 1 (instead include wording such as ‘Level 1 to come into effect 6 months after the RTS has been approved’). In this context, EFAMA also strongly calls for ESMA to exercise regulatory forbearance powers in the form of “no-action letters” by allowing NCAs and firms to temporarily waive (Level 1) requirements that are incomplete in the absence of implementing acts or guidelines, which has been a successful practice in the United States.
  • Focus on supervision and enforcement rather than (new) regulation: EU rules cannot and should not be amended continuously. ESMA should allow NCAs to share their experiences and best practices in enforcement cases, and possibly even coordinate between them asEFAMA believes that ESMA’s authority can only be further strengthened here. In addition, supervisory and regulatory convergence through the ESAs is a crucial factor to ensure comparability and a regulatory level-playing field across the Member States and to deliver the ambitious Capital Markets Union.

The association does not support material changes to the ESMA Founding Regulation, nor further “quick fixes” to relevant sectoral legislation applying to the investment fund industry for that matter. ESMA should simply be granted more time to effectively make use of its new convergence powers (under the amended ESMA Founding Regulation has only been in effect since January 2020.


The current framework with the new convergence powers should be sufficient for ESMA to create a Single Rule Book and achieve consistent EU-wide supervision for the European asset management industry.






For further information, please contact:


Daniela Haiduc                                                 

Head of Communications                                              

+32-2-473 562 936                                                                               



Notes to editors:


About the European Fund and Asset Management Association (EFAMA)


EFAMA, the voice of the European investment management industry, represents 28 member associations, 58 corporate members and 24 Associate Members.  At end Q4 2020, total net assets of European investment funds reached EUR 18.7 trillion.  These assets were managed by more than 34,300 UCITS (Undertakings for Collective Investments in Transferable Securities) and almost 29,700 AIFs (Alternative Investment Funds).  At the end of Q2 2020, asset managed by European asset managers as investment funds and discretionary mandates amounted to an estimated EUR 24.9 trillion.   More information available at


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