Should Esma be allowed to issue no action letters?

Author: Lizzie Meager | Published: 16 Aug 2017

Steven Maijoor, the head of the European Securities and Markets Authority (Esma) has made several public statements this year requesting enhanced powers. These broader powers would include the ability to impose higher fines on supervised entities, improve supervisory convergence and to issue no action letters.

No action letters, a hallmark of the American regulatory environment, indicate that no legal action will be taken against an individual or firm engaging in a particular activity. When used appropriately they can provide valuable clarification on the unintended consequences of certain rules.

The US Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) both use them in a range of scenarios, often to provide relief to groups the rules were not originally drafted for but are unintentionally caught. They can be issued on a time-limited or indefinite basis.

"There’s no reason why Esma shouldn’t issue no action letters," said Richard Frase, partner...



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