ESMA calls for changes to Transparency Directive following the Wirecard scandal

The European Securities and Markets Authority (ESMA) has written to the European Commission with a proposal to improve the Transparency Directive (TD), following the Wirecard scandal.

In it letter, the regulator recommends changes are made to meet four aims.

The first is to enhance the cooperation between authorities across the EU. To achieve this, it asks to eliminate confidentiality impediments that prevent efficient and effective exchange of information between TD competent authorities and bodies including, MAR/Prospectus CAs, audit oversight bodies, prudential supervisors and AML supervisory authorities.

Furthermore, it calls for a real-time strategy on cooperation and information exchange among accounting enforcers and the other previously mentioned groups.

Its second recommendation in the letter aims to improve coordination and governance on a national level.

This can be achieved by requiring national transposition measures outline the responsibilities, reporting obligations and roles when delegation around the enforcement of financial information is implemented. This will include regular review clauses to ensure delegation and designation models are fit for purpose.

ESMA’s third goal is to strengthen independence of NCAs. This will prohibit the outsourcing regular examinations of financial information to audit firms.

It will also modify the TD to ensure central competent authority, designated authorities and staff are independent from market participants and governments.

Finally, the proposed changes call to strengthen harmonised supervision of information across the EU.

To achieve this, it hopes to modify the TD to ensure the powers of accounting enforcers are harmonised across the EU. This also ensures the enforcers and designated authorities will have binding powers to request information and to require corrective information.

Additionally, ESMA hopes to supplement the powers of NCAs to require an independent second audit or forensic examination and carry out joint on-site inspections or investigations.

Last year, Wirecard was alleged of a global multi-billion dollar scam.

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