European Union lawyers released a legal opinion which says the EU’s markets watchdog should be allowed to review how asset managers delegate tasks.
EU states asked the bloc’s legal service to check whether handing more supervisory tasks to the three bodies was compatible with founding treaties and the “Meroni” EU court ruling or Meroni doctrine.
The legal service said in a June 25 opinion seen by Reuters that the EU plans generally don’t go against “Meroni”, a 1956 EU court ruling that limited how much of the European Commission’s decision-making powers can be delegated to agencies like ESAs.
The 23-page opinion said the proposed powers for the European Securities and Markets Authority (ESMA) to make recommendations on arrangements made by banks and asset managers to outsource or delegate tasks to staff and bodies based in another country complied with Meroni.
Meanwhile asset managers in the United States and Britain have warned the EU against uprooting the long-standing global practice of delegation.
Recommendations would not breach Meroni because they are not legally binding, the opinion said.
“Nothing in the two provisions under examination suggest that the national competent authorities are bound by the ESAs recommendation and obliged to comply with its content,” the opinion said.
“In both cases, the competent authority retains its power of discretion to adopt a final decision on the matter covered by the recommendation.”
Reuters also noted that the opinion also raises concerns about proposed powers for ESMA to directly supervise prospectuses issued by companies wanting to list their shares and bonds, the opinion said.