The representation of non-financial corporates (NFCs) before the European Supervisory Authorities (ESAs) must be improved, according to a major treasurers’ trade group.
In response to a consultation on the state of the ESAs framework, the European Association of Corporate Treasurers (EACT) highlights what it regards as a major flaw in the current system: at present, the three regulators do not recognise NFCs as a stakeholder group in their own right.
“We understand the challenges that the ESAs face in terms of composing well-balanced and representative stakeholder groups,” the EACT tells the European Commission.
“Certain amendments to the composition process,” it writes, “should be considered in order to help the ESAs in their work, and to ensure that stakeholder groups are adequately composed.
“One such amendment would be to include NFCs – which are not SMEs – as their own group of stakeholders, or to explicitly include them in an existing stakeholder category.”
At present, the EACT points out, “only SMEs and issuers… are included as stakeholders, but other NFCs are not granted a seat, which we find inconsistent and discriminatory”.
It notes: “NFCs use financial services and participate in financial markets in diverse ways – as issuers of securities (but it is important to note that not all non-financial companies issue securities), as counterparties to derivatives transactions, and as end users of a variety of banking services and products – and have a legitimate interest in the development of financial regulation in the EU.”
The trade group also responds to a question on how the three ESAs – namely, the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Securities and Markets Authority (ESMA) – should be funded in the future, should the Commission decide to change the model.
It writes: “If the funding model is changed, either through a member state key or an entity-based key, the entities that will be funding the ESAs should be clearly described and above all limited to only financial sector participants – leaving out non-financial companies that participate in financial markets and use financial services as end users, as well as consumers and SMEs.
“Financial institutions – as the [entities] that the ESAs have been established to monitor and to regulate – are the ones that should bear the cost of any funding obligation towards the ESAs. Extending the funding obligation to any financial market end user would not be justified or proportionate.”