Revised EU regulatory strategies and workplans

The European Commission (EC) has set out its work programme for 2023. At the same time, the European Supervisory Authorities (ESAs) have each set out their workplans for 2023, providing a useful insight on their upcoming regulatory activities and key areas of focus.

The European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA) have also launched new strategies that will run from 2023 until 2028 and 2026 respectively.

There are several consistent themes across the programmes and strategies, including ESG and delivering the sustainable finance agenda, supporting developments in innovation and digital finance, strengthening supervision and supervisory convergence, protecting retail investors and policyholders, and promoting financial stability.

Though much broader in its entirety, the EC work programme includes the following initiatives which will be relevant to financial services firms:

• A commitment to the European Green Deal, which guides the development of sustainability-related financial regulation
• Commitment to creating a Europe fit for the digital age, including tabling proposals for a digital Euro before its potential issuance by the ECB
• A revision to the payment services directive to better ensure the safe use of online payment services and to protect against fraud and financial abuse
• A framework on open finance, to improve data access in financial services

The EBA's 2023 work programme will deliver on the strategic priorities set out for 2023-2025.

These include five vertical priorities:

1. Finalising Basel implementation in the EU
2. Running an enhanced EU-wide stress test
3. Providing data to all stakeholders (for supervisory authorities and to monitor market discipline)
4. Addressing the new challenges arising from the digitalisation of finance
5. Further contributing to the build-up of the capacity to fight ML/FT¹ and to protect consumers in the EU

The EBA will also focus on one horizontal priority — executing its ESG roadmap, through focus on the EU ESG agenda in its regulatory and risk assessment mandates, as well as in its own organisation.

Compared to the 2022 work programme, adjustments have been introduced to reflect new mandates expected in 2023. Following political agreements reached on the Digital Operational Resilience Act (DORA) and Markets in Crypto-Assets (MiCA) legislation, the EBA will actively start preparations to discharge new oversight responsibilities (together with EIOPA and ESMA). It will also continue to foster all possible internal and external synergies — working closely with National Competent Authorities (NCAs) and other bodies.

EIOPA has set out a new strategy for the period 2023 — 2026 that is designed to strengthen the resilience and sustainability of the insurance and pensions sectors, and to ensure the protection of consumer interests across the EU.

EIOPA's strategic priorities are:

• Sustainable finance — contribute to building up sustainable insurance and pensions, including by addressing protection gaps, for the benefit of citizens and businesses
• Digital transformation — support the supervisory community and industry to mitigate the risks and seize the opportunities of the digital transformation, including by further promoting a data-driven culture
• Supervision —  promote sound, efficient and consistent prudential and conduct supervision throughout Europe, particularly in view of increased cross-border business
• Policy —  deliver high-quality advice and other policy work taking into account changing and growing needs of society as well as the effects of new horizontal regulation
• Financial stability —  further enhance financial stability, with particular focus on sector risks, vulnerabilities and emerging threats
• Internal governance —  be a model EU Authority with high professional standards, cost-effective governance and a positive reputation within the EU and globally

Alongside the strategy, EIOPA has also published its Single Programming Document, including the Annual Work Programme for 2023.

Key activities planned for 2023 include:

• Integrating ESG risks in the prudential frameworks of insurers and pension funds
• Initiating a one-off coordinated climate change stress test
• Implementing DORA
• Developing a sound regime for the use of artificial intelligence
• Addressing consumer detriment from cross-border activities
• Delivering advice in relation to the review of the IORP II Directive
• Following up on the potential materialisation of downside risk stemming from the ongoing crises in the context of high inflation and low/potentially negative growth
• Chairing the Network of EU Agencies

There are no material surprises in EIOPA's areas of focus. However, the balance of priorities being equally split between internal and external activities illustrate that EIOPA is looking to transform in terms of how it delivers policy work, supervises and organises itself.

ESMA has set out a new strategy (PDF 1.65 MB) for 2023 — 2028 that focuses on five topics. Three of these are strategic priorities — fostering effective markets and financial stability, strengthening supervision of EU financial markets, and enhancing protection of retail investors. These will be driven by two themes — enabling sustainable finance and facilitating technological innovation and effective use of data.

ESMA's 2023 work programme (PDF 5.12 KB) is the first under the new strategy. The programme has six areas of focus:

• Enabling sustainable finance — ESMA will deliver on the priorities set out in the 2022-2024 sustainable finance roadmap (PDF 331 KB)
• Facilitating technological innovation and effective use of data — similar to the EBA, ESMA's mandates are centred around MiCA, DORA, and the Distributed Ledger Technology Pilot regime
• Investors and issuers — including investment services, investment management, issuer disclosure, benchmark providers, and credit rating agencies
• Markets and infrastructure — covering Central Counterparties, trading activities, Data Reporting Service Providers, and Repositories
• Risk assessment — ESMA will focus on five analytical priorities
• Supervision and convergence — focusing on ESMA's direct supervision as well as promoting supervisory convergence, for example via peer reviews

ESMA's wide-ranging programme underlines its role as facilitator, coordinator and supervisor. An internally focused section of the work programme provides an update on the horizontal activities, which will enable ESMA to deliver on these activities. Similar to EIOPA, ESMA is focused on internal development as well as external delivery.

Heading into 2023, the ESAs have set broad-ranging programmes of work. Firms will need to keep up with regulatory developments to help ensure they are appropriately prepared for the changes to come.