1. The EU Supervision, Crisis Management and Resolution Authorities: New Supranational Powers and Constitutional Law Limits Jonathan Overett Somnier, Head of Legal Unit Law, Justice and Development Week 2014, World Bank, October 2014

2. Overview Some legal background European System of Financial Supervision EBA’s role, powers & governance A legal update Conclusions EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 2

3. Legal position of agencies in the EU Longstanding view – EU institutions can do more than agencies, ‘policy’ reserved to institutions Meroni (Case 9/56) – Can delegate clearly defined executive powers if subject to strict review in the light of objective criteria determined by delegating authority Arts 290 and 291 TFEU – delegation of quasi-legislative/implementing powers to Commission/Council (not agencies) Arts 263, 265, 267 and 277 TFEU establish framework for judicial review of agencies’ acts, including acts of general application EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 3

4. European System of Financial Supervision Supervision European Banking Authority European Insurance and Occ. Pensions Authority European Securities and Markets Authority Joint Committee Macro- prudential European Systemic Risk Board EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 4 National supervisory authorities (Banking) ECB SSM plus ECB & national central banks Representation Harmonisation of regulation and supervision EU National & Eurozone

5. The EBA’s objectives Protect the public interest by contributing to the short, medium and long-term stability and effectiveness of the financial system, for the Union economy, its citizens and businesses By contributing to:  sound, consistent, effective level of regulation  ensuring integrity, transparency, efficiency and orderly functioning of financial markets  strengthening international supervisory coordination  preventing regulatory arbitrage and promoting equal conditions of competition  ensuring the taking of credit and other risks are appropriately regulated and supervised  enhancing customer protection Treaty base: Article 114 TFEU – measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 5

6. The EBA’s powers Technical standards Temporary prohibitions and restrictions Dispute settlement Emergency situations Guidelines and recommendations Breach of Union law investigations Opinions to EU institutions / supervisors WarningsPeer reviews Participation in colleges Stress testsData collection EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 6

7. The single rulebook / handbook illustrated Capital Requirements Directive Guidelines on remuneration Guidelines on supervisory review process Single Supervisory Handbook RTS on identified staff RTS & ITS on passporting EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 7 Legislators Binding EBA technical standards Binding EBA guidelines Comply/explain EBA handbook Non-binding – use

8. Governance Full-time staff member Chairs BoS (non-voting) and MB Represents the EBA in Joint Committee Chair Full-time staff member Manages the EBA Implements work programme Executive Director Guides work of the ESA Adopts main regulatory/supervisory products Composition – see next slide Board of Supervisors Ensures ESA’s mission is carried out, and work programme implemented 6 members of BoS plus Commission rep Management Board EBA at end 2014 – 111 temporary agents, 15 contract agents, 17 secondees Staff EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 8

9. Board of Supervisors EBA BoS EBA Chairperson Heads of 28 national supervisors (voting) European Commission ECB Supervisory Board – Single Supervisory Mechanism European Systemic Risk Board ESMA & EIOPA Observers (EEA EFTA authorities, Single Resolution Board) Accompanying representatives (eg resolution authorities) EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 9

10. Voting in the Board of Supervisors EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 10 Develop draft technical standardsQMV+Double SMV Guidelines and recommendationsQMV+Double SMV Breach of Union law recommendationsPanel proposes SMV+Double SMV Emergency decisionsSMV+Double SMV Binding mediation decisionsPanel proposes SMV+Double SMV OpinionsSMV Temporary prohibition and restriction decisions SMV QMV+Double SMV if requested to reconsider Appointment of mediation panel¾ majority Any other Board decisionSMV

11. Meroni revisited Short-selling (UK v European Parliament and Council, Case C-270/12) ESMA’s power to temporarily ban short-selling of certain stocks when financial stability threatened considered lawful  Powers require deployment of specific technical and professional expertise  Within bounds of regulatory framework establishing in founding regulation  Discretion limited by conditions and criteria and by temporary nature  Part of series of rules endowing national and EU authorities with intervention powers EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 11

12. Conclusions Role of agencies in the European Union Relationship with national bodies Relationship with Union institutions/bodies EU SUPERVISION, CRISIS MANAGEMENT AND RESOLUTION AUTHORITIES 12

13. EUROPEAN BANKING AUTHORITY Tower 42, 25 Old Broad Street London EC2N 1HQ Tel: +44 2073821770 Fax:+44 207382177-1/2 E-mail: info@eba.europa.eu http://www.eba.europa.eu