ESMA publishes response to draft Maystadt report

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14 Nov, 2013

Following the publication of the final Maystadt report, the European Securities and Markets Authority (ESMA) has made available its response to the draft of the report. The final report has undergone some changes vis-à-vis the draft version but the main recommendations remained the same so ESMA's core points remain applicable.

While pointing to broad support for a commitment towards globally accepted, high-quality accounting standards and for maintaining the current endorsement process as such, Mr Maystadt proposed three options in his report how the process could be improved to ensure that the EU’s voice is better heard in developing high quality accounting standards:

  • Under option 1 EFRAG would be transformed such that the public policy voice was embedded into the decision-making process already before recommendations are made to the Commission.
  • Option 2 suggests making EFRAG a part of the European Securities and Market Authority (ESMA).
  • Option 3 would be to set up a separate European agency to replace EFRAG.

Mr Maystadt's preliminary recommendation is to follow the option 1.

In its comment letter, ESMA expresses the belief "that options 2 and 3 are not sufficiently developed [...] to allow a real assessment of their validity and merit with respect to the objectives assigned". At the same time, ESMA believes that the recommended first option does not fully meet the objective of reinforcing the credibility and political legitimacy of the body in charge of providing advice to the European Commission. The letter states:

Our main concern relates to the fact that it does not embody significant characteristics that would be necessary such as:
  • the need for ensuring independence from private stakeholders' interests which has been identified as a significant weakness of the current system,
  • the need to insure that all EU MS [Member States] are represented as part of the democratic process of establishing legislation in the EU, and
  • the importance of ensuring proper interaction with existing European authorities which also play a role in the area of financial reporting.

Please click for access to the full letter on the ESMA website. (Please keep in mind that this is a response to the draft report and some of ESMA's concerns were addressed in the final report.)

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