Interview with Verena Ross, chair of ESMA

Prior to this, Verena held a number of senior posts in the UK’s Financial Services Au-thority (FSA) and was a member of the FSA’s Executive Committee. Verena joined the FSA in 1998 to run the Executive Chairman’s office during the regulator’s start-up phase and was briefly a seconded advisor to the Hong Kong Securities and Futures Commission in 2000. She held various positions in the FSA’s Markets Division and was Director of Strategy & Risk Division before becoming Director of the International Division.

Verena is a German national. Following studies in Sinology and Economics in Ham-burg, Taipei and London (SOAS) she began her career at the Bank of England in 1994, where she worked as an economist and banking supervisor.

How do you see the role of ESMA and how it has developed since you first started out as executive director, to later become chair of ESMA, some 12 years ago?

Verena Ross: I have been here for some years now and if I look back to when I first joined ESMA, exactly 12 years ago in May 2011, it was a small secretariat. ESMA had been given responsibility mainly the detailed rulemaking of the major financial market reforms after the financial crisis. I think ESMA has developed enormously since then, and we have grown from 35 to over 300 people. We have broadened the mandates from initially focusing very much on market infrastructure and basic investor protection rules to a wide range of responsibilities across the whole value chain of investments across the capital market. ESMA also has additional responsibilities in new areas such as sustainability and digitalisation, and has moved from being largely a regulatory body to being much more of a supervisory body. This applies both to our own direct supervisory mandates and to being much more focused on driving supervisory convergence and common supervisory approaches amongst the national competent authorities.

How do you see the financial industry involvement in your work?

Verena Ross: For us, it is extremely important to engage with the financial markets industry and its stakeholders: issuers, dealers, consumers, investors, but also everyone who plays an important role in the market, whether it is buy-side, sell-side, market infrastructure or post-trade. This is extremely important to give us a perspective on what regulations mean on the ground and how our regulatory efforts actually impact different parts of the European securities market landscape. We exchange with a broad range of stakeholders, through the Securities Markets Stakeholder Group (SMSG), advisory groups, workshops, public consultations, open hearings etc.

Sustainable finance has become increasingly important – how do you see ESMAs role in this field?

Verena Ross: It is a very important focus point for us, and sustainable finance is one of the central themes in ESMA’s strategy for the next five years, permeating all our work . The financial market needs to play its part in the sustainable transition we need in Europe. From our perspective, it is very important that we continue to work on the entire investment value chain: from having the right information about our companies in terms of their sustainability profile through corporate sustainability reporting to the information provided by the products to retail investors.

All this needs to be properly linked so that we have good transparency and so that we avoid greenwashing, which is clearly a risk that we are currently facing. Many investors are asking for sustainable products, but we do not yet necessarily have all the information about the products that can provide this. We need to make sure that we can continue to focus on this and build capacity on this important issue, both among regulators and supervisors at national and EU level, to help the market better understand the requirements of the regulations. So, we are also doing a lot to try to provide additional guidance to market players.

Where do you see ESMAs role in financial education in general?

Verena Ross: In terms of financial education, I think we are very aware that it should be a joint effort because we are a European organisation. Our direct link to the individual investors in many countries is quite far away, so we need to work with regulators at national level, national competent authorities or NCAs, to really drive some of these education efforts.

What we are trying to do is share lessons and learn from each other, and we are coordinating our messages where we see particularly high risks in the European Union. We help NCAs to push educational warnings, for example on certain products with risky business models, as we have done for crypto over the years. We also work with our European counterparts – EBA and EIOPA. Because again, everyone is an investor, someone who buys insurance products, a depositor in a bank, meaning that we have to make sure that we work across different sectors. [NB – a recent example is the factsheet on inflation]

Women and Diversity in Finance

Urban Funered: The SSMA is actively trying to get more women working in our part of the industry. By way of background we likely have a good equilibrium between men and women in general in financial markets in Sweden, but in our part of the industry including investment banking, markets, and research, it is lower, an estimate being 25 – 30 precent. We are now actively trying to get more young women interested in finance, with a special focus on “our part” of the industry, starting already at high school level and at universities.

We know that you have been speaking and thinking about this topic, and you are yourself an example of a successful woman in the financial sector. Do you have a message to convey to those who participate in our women in finance initiative, and to other women in finance initiatives that we find around Europe, and the importance of such work

Verena Ross: Within ESMA, gender diversity is generally quite positive; we have pretty much a 50/50 split even at senior level, which I think is quite unusual in financial services in general. I have seen what you are doing here in Sweden and the survey you did on what it looks like in your part of the industry. And there is clearly more to do here in terms of women’s engagement in the industry and how we can encourage young women to see this part of the industry as a career choice that offers fascinating new insights every day and interesting work opportunities. We also need to make it possible for women to work in a way that is flexible enough for them to have a career in this area. Another thing that is close to my heart is diversity, not only from a gender perspective, but from a much broader perspective, because at least in ESMA it is one of our biggest challenges. Now that we are relatively well positioned in terms of gender bias, it is about making sure that we drive diversity in a much broader area. Because ultimately, a more diverse workforce and more diverse colleagues contribute to the quality of decision-making and the pooling of ideas.