2.5.4.2 Decisions by ESMA addressed to financial market participants

On the basis of article 8(2)(f) of the regulation, ESMA has the power to take individual decisions addressed to financial market participants, in the specific cases referred to in article 17(6), article 18(4) and article 19(4). If a competent authority has not correctly applied the legislation referred to in article 1(2), in particular by failing to ensure that a financial market participant satisfies the requirements laid down in that legislation, ESMA may upon request from one or more competent authorities, from the Commission or on its own initiative investigate the alleged incorrect application of Union law.1 ESMA may, at the latest within two months from initiating its investigation, address a recommendation setting out the action necessary to comply with Union law to the competent authority concerned.2 Within ten working days of receipt of the recommendation, the competent authority so addressed has to inform ESMA of the steps it has taken or intends to take to ensure compliance with Union law.3 If the competent authority has not complied with EU law within one month from receipt of ESMA's recommendation, the Commission may, after having been informed by ESMA or on its own initiative, issue a forma! opinion requiring the competent authority to take the action necessary to comply with Union law.4 Within ten working days after receipt of this decision, the national competent authority has to inform the Commission and ESMA of the steps it has taken or intends to take to comply with the Commission's forma! opinion.5

If the national competent authority does not comply with the Commission's forma! opinion and if it is necessary to ensure the orderly functioning and integrity of the financial system, ESMA may adopt an individual decision addressed to a financial market participant requiring the necessary action to comply with directly applicable obligations under Union law including the cessation of any practice.6 This individual decision prevails over any previous decision adopted by the national competent authorities on the same matter.7

If the national competent authority, in emergency situations, does not comply with ESMA's decision,8 ESMA may adopt an individual decision addressed to a financial market participant requiring the necessary action to comply with its directly applicable obligations under Union law including the cessation of any practice.9 The laffer ESMA decision prevails over any previous decision adopted by the national competent authority on the same matter.10

If a competent authority, in the case of continued disagreement between national competent authorities, does not comply with ESMA's decision requiring them to take specific action or to refrain from action in order to settle the matter, with binding effect for the competent authorities concerned, in order to ensure compliance with Union law11 and thereby fails to ensure that a financial market participant complies with requirements of directly applicable Union legislation referred to in Article 1(2), ESMA may adopt an individual decision addressed to a financial market participant requiring the necessary action to comply with its obligations under Union law, including the cessation of any practice.12

Financial institutions operating cross-border remain under the supervision of colleges of national supervisors. The regulation does not provide ESMA with any significant powers. Its role is to contribute to promoting and monitoring the efficient and consistent functioning of these colleges and foster the coherence of the application of Union legislation by the members of these colleges.13 ESMA will get observer status in these colleges as it deems appropriate. For the purpose of this participation, it shall be considered a competent authority within the meaning of the relevant legislation. 14 However, the role to play by ESMA seems to be restricted to the collection of relevant information from the national competent authorities so as to facilitate the work of these colleges.15