A ‘house of cards’ construction for the expanding mandate of supervision of financial markets in the EU

The supervision of financial markets in the EU has been undergoing considerable changes with a remarkable
speed in the recent years. One of the most recent legal changes involves attributing more powers to ESMA.
These include powers to perform direct enforcement, to set up strategic policy priorities for national
supervisors and to be the ‘guardian’ of relevant legislation, which have been powers that used to be typically
given to the EU institutions by the treaties. This paper looks at this continuously evolving legal architecture
of supervision of financial markets. This discussion paper suggests that the recent legislative developments
supported by the recent landmark case-law aim to enhance the effectiveness of the supervision and
enforcement in the financial markets in the EU. Yet, effectiveness of policies is better off if promoted thanks
to the rule of law, the latter yet needs to be strengthened, especially at the level of the primary law, i.e.
treaties. This paper stresses the need for the treaty reform concerning the ‘constitutionalisation’ of EU
agencies, of supervisory and enforcement powers of the EU (in the financial markets), and of the evolved
institutional balance to ensure resilience to possible financial and ongoing political (the rule of law) crises.
The ongoing expansion runs a risk of instability of a ‘house of cards’ construction.