A European Commission plan to shift supervision from national regulators to the bloc’s markets watchdog divides member states as Brussels seeks deeper capital market integration.

Stock exchanges, major cryptocurrency companies and clearing houses operating across the European Union are set to move under the direct gaze of the European Securities and Markets Authority (ESMA) under reforms being drawn up by the European Commission. The bid to concentrate supervision in Paris marks one of the boldest steps yet in Europe’s long-running effort to knit together fragmented capital markets — and it is already exposing political fault lines among member states.

According to senior EU officials and recent public statements from ESMA leadership, the Commission is preparing proposals that would migrate significant supervisory responsibilities from national watchdogs to the EU level. The move follows years of patchy enforcement in fast-growing corners of the market, particularly crypto, as well as long-standing concerns that uneven rule‑making and oversight are sapping liquidity and raising costs for investors. Centralising supervision, supporters argue, would sharpen enforcement, reduce regulatory arbitrage and help Europe compete with the United States and the United Kingdom for listings and capital.

Momentum has built since a landmark review led by former European Central Bank chief Mario Draghi urged the bloc to create deeper, more unified capital markets to finance defence, the green transition and digital infrastructure. Brussels sees more consistent rule‑application as a prerequisite for that ambition. ESMA already has fresh tasks queued up — including authorising and supervising consolidated tape providers for equities and bonds, and setting the parameters for a single volume cap on dark trading — but the Commission’s plan would go a step further by making ESMA the primary supervisor for selected cross‑border market actors.

People familiar with the emerging blueprint say it contemplates ESMA taking direct oversight of systemically important trading venues and clearing houses with large cross‑border footprints, alongside the biggest crypto‑asset service providers (CASPs) under the EU’s Markets in Crypto‑Assets (MiCA) regime. The intent is to ensure that firms whose failures could reverberate across multiple jurisdictions face uniformly tough scrutiny, with ESMA setting expectations and deploying on‑site inspections, data‑driven market surveillance and coordinated enforcement.

Crypto has become an early flashpoint. MiCA’s rules for service providers took effect in late 2024, but national implementation has varied, with some supervisors issuing licences under lighter‑touch frameworks than others. France, Italy and Austria have publicly pushed for ESMA to supervise the largest CASPs directly, warning that inconsistent enforcement creates risks for consumers and market stability and invites ‘passporting’ from lenient hubs. Malta and other smaller states counter that moving authority to the EU level would add bureaucracy and blunt their ability to nurture local fintech sectors.

Clearing is another pillar of the plan. Following the EMIR 3.0 reforms, the EU has begun nudging banks and asset managers to keep more euro‑denominated derivatives clearing inside the bloc and to maintain active accounts at EU central counterparties. Brussels and ESMA argue that closer, centralised oversight of clearing houses is necessary to monitor concentration risks and cross‑border exposures, especially in stress events. Supporters also point to the need for a more resilient clearing ecosystem as global markets digest shifting rates, energy price volatility and geopolitical shocks.

Separately, ESMA is preparing for the October switch to a single EU‑wide volume cap for dark trading under MiFIR, and is finalising technical work to shorten the securities settlement cycle under CSDR. While these moves are largely technocratic, they reinforce the narrative of a supervisor expanding its footprint — and they offer a testbed for how centralised data and rule‑setting can improve market quality.

The politics are delicate. Countries hosting outsized slices of the EU’s market infrastructure fear losing influence and high‑value jobs if power shifts decisively to ESMA. Smaller member states worry that a one‑size‑fits‑all approach will favour larger financial centres and pile on compliance costs for domestic firms. But proponents respond that balkanised supervision has already raised costs by multiplying audits and diverging interpretations — and left loopholes in areas like crypto and ESG data services.

For exchanges and trading venues, direct ESMA supervision would likely mean more uniform market‑abuse surveillance standards, tighter data‑quality obligations and greater scrutiny of outages and business continuity. Clearing houses could face new EU‑level stress testing, recovery and resolution planning, and harmonised margin‑model disclosures. For crypto companies, the biggest operational changes would include consolidated prudential reporting, more rigorous operational‑resilience testing and stricter rules on conflicts of interest and custody segregation.

Investors could benefit from cleaner market data, less venue‑by‑venue fragmentation and more consistent enforcement against manipulative practices. Retail consumers in crypto and equities would see stronger complaints‑handling standards and clearer disclosures, while institutions would gain greater certainty about how rules are applied across borders. The trade‑off is cost: ESMA would need resources to scale up, and firms may face higher supervisory levies in the near term.

At least three issues will determine the final shape of the reform. First, scope: which entities qualify for EU‑level supervision — by size, cross‑border activity, systemic footprint, or a combination? Second, accountability: how ESMA will coordinate with national competent authorities on day‑to‑day oversight and crisis management. Third, timing: much of the legislative plumbing could arrive via changes to MiFIR, EMIR and MiCA empowering regulations, with targeted delegated acts in late 2025 and 2026.

The Commission is expected to table its proposals in the coming months, aiming to land political agreement in 2026. Between now and then, expect a hard‑fought debate pitting ambitions for a deeper, more liquid Savings and Investment Union against sensitivities over national control. Markets will watch for early signals in ESMA’s ongoing work — from consolidated tape authorisations to settlement‑cycle reforms — as a preview of how a larger mandate could operate in practice.

Whether or not the full plan survives the political grind, Europe is unmistakably moving toward more centralised market supervision. For firms operating across the bloc, the prudent course is to prepare for ESMA‑grade expectations on data, governance and resilience — and to assume that the era of ‘lightest gate wins’ is drawing to a close.