Amid a growing push to reduce compliance costs, enhance competitiveness and foster a cohesive European financial market, the European Securities and Markets Authority (ESMA) is introducing a new digital strategy that will guide its technological evolution.
In a pair of reports issued Tuesday, the regulator unveiled its new digital strategy and updated its existing data strategy, which set out its vision for more technology-based supervision, enhancing regulatory innovation and reducing needless administrative burdens.
“ESMA is committed to smarter regulation and supervision, and this drives our dual focus on digitalization and simplification,” said Verena Ross, chair of ESMA, in a release.
“These two strategies support a digitally mature, resilient and agile authority that understands the importance of data for its community,” she added.
The digital strategy details the regulator’s plans for enhancing regulatory efficiency, resilience and innovation over the next couple of years — including plans to streamline regulatory reporting, enhance the use of data and expand oversight of the crypto market — with the ultimate goal of supporting more efficient, competitive financial markets.
The strategy reflects the evolving geopolitical environment, which has prompted a renewed commitment from European policymakers to pursue a more integrated capital market and stronger European financial markets.
According to the paper, rapidly evolving technology is creating new opportunities and posing new risks for regulators. These risks include growing cybersecurity threats and vulnerabilities. Relying on external tech providers also exposes regulators to elevated policy uncertainty that may disrupt the provision of services, it noted.
“Future policy changes, including potential trade restrictions or limitations on access to cloud services, could affect ESMA’s operational continuity and cost structures. Managing technological dependencies therefore is a critical consideration,” the paper said.
At the same time, the regulator said it’s grappling with digital ethics.
“Alongside technical safeguards, ESMA must uphold data privacy, ensure transparency in how technology and data are used, and address ethical implications of emerging technologies,” it said.
The digital strategy aims to help it effectively tackle these kinds of challenges too.
By 2029, the regulator plans to integrate its data and digital strategies into a single, unified strategy.