Esma’s Verena Ross: protecting the EU’s financial markets

Verena Ross struggles to put her finger on the most challenging time in a nearly 30-year regulatory career that began in the UK before taking her to mainland Europe as Executive Director of the EU’s new market regulator in 2011. and its chairman in 2021.

Was it its earliest days in Paris, when the European Securities and Markets Authority sought to expand from a 35-strong start-up while simultaneously steered EU markets through an unprecedented sovereign debt crisis?

Or was it when the Covid-19 pandemic hit and Ross had to face the same practical problems as leaders of other organizations, while also ensuring that European markets do not collapse under the most unusual and unpredictable circumstances?

She can’t really say it, and she obviously hasn’t given it much thought. The no-nonsense, German-born regulator is more the type to get on with it, and at least her most challenging time may be ahead of her.

Esma has the unenviable task of coping with the ramifications of Brexit by maintaining good day-to-day relations with UK regulators and trying to lead the politically explosive row over where to approve – or mediate – trades for the EU market by companies such as the British LCH and the pan-European exchange operator Euronext.

Ross’ 300-strong agency is also one of the standard-bearers of Europe’s Capital Markets Union program, a grand but as yet elusive political project to replicate the US feat of channeling trillions of dollars from households and savers into debt and equity issued by companies in the United States. all shapes and sizes.

Esma is now trying to establish policies for some of the most intricate areas of traditional markets, while making its mark in new areas such as sustainability, where it plays a leading role in transparency, and cryptocurrency, where it will soon take responsibility for directly monitor parts of European industry.

“One of the challenges of these jobs is how wide it is. You have to know what’s going on because you never know exactly where the next problem comes from,” she says. “But you have to set clear priorities within that. . . where the core themes are at any given moment.”

In October, Esma unveiled her strategy for the next five years, ticking both the traditional boxes of fostering effective markets and preserving financial stability and the modern ones, including enabling sustainable finance and facilitating innovation and the use of of dates.

The 54-year-old tries not to dive as deep into the weeds as her natural instincts would take her, reminding herself that she’s not the tech expert she once was in her early career as an analyst at the Bank of England. She is also aware that she is not “gasping” her successor as Esma director, Natasha Cazenave, whom she lavishly praises. She says her new job as chairman is “very different” from her old one.

“I really focus on chairing the board meeting, setting the agenda, trying to steer the strategy and vision of where we want to go, and also focusing a lot as chair on the external representation of the authority,” she says.

Esma must balance the priorities of the EU and Member States with the regulator’s core objective of securing European markets. Clearing, a once obscure part of the market infrastructure that has become emblematic of the EU’s attempt to cut ties with London’s financial hub, is an area where Ross’s two masters appear to be in conflict.

EU politicians, led by Financial Services Commissioner Mairead McGuinness, have stressed the need to move clearing from London, where it is now most commonly done, to the EU. In April, McGuinness compared the situation to curbing the EU’s over-reliance on energy from Russia, comments suggesting that nothing short of London’s full capitulation will saturate Brussels. The financial services industry, from London to Frankfurt to Paris, argues that moving clearing wholesalers out of the British capital would increase both risks and costs.

“Our approach was to identify where there are areas of excessive dependency [on London], specific systemic risks we have to deal with,” says Ross, who describes himself as a “devoted European at heart”. “It’s more about making sure there are alternatives in the European Union rather than a binary choice” [between London and the EU] . . . I think the most important thing is that there is a strong European clearing infrastructure, and the ability to clear in Europe for these systemic tools and services.”

I hope I managed to reach the position [I’m in]not only because I am a woman, but also because I have a certain experience and knowledge that people value and believe I can do the job

For now, London will continue to do most of the EU’s clearing and Ross says day-to-day relations with UK authorities have “worked quite well”. Can anything be done to make relations even better? “I think there’s a broader question, not really in our purview, about how the relationship between the UK and the EU, more politically, is developing, but that’s not really for us to comment on,” he said. she, while taking the “just carry on” approach she’s adopted in the six years since the Brexit vote, although she describes the UK’s decision as something that left her “very sad” as someone who spent her formative professional years in spent in London.

The regulator, who studied Chinese and economics at London’s School of Oriental and African Studies, is also diplomatic about the capital markets union, arguing that “important steps have been taken”, although admitting the concept may be “difficult to understand” for the average person.

From the financial crisis to Brexit and Covid, many of the issues that made headlines during Ross’s time at Esma were issues her agency needed to respond to. Sustainability and crypto regulation offer Ross and her team an opportunity to lead the way.

Esma was at the forefront of the fight against greenwashing, for example by developing a European framework last year for the provision of information about sustainability.

Ross believes her agency — one of many dealing with climate change issues in the financial services industry — “has an important role to play. . . to ensure that the retail investor ultimately understands what he is buying” given the “huge demand” for green products.

“It’s not easy because it’s a highly evolving picture with several pieces of legislation coming together pretty quickly,” Ross says. Esma is also restricted because it is “not the direct supervisor” and thus relies on the national authorities to follow her guidelines, as Esma does in much of her work.

In recent years, Esma has publicly warned European investors about the dangers of investing their money in cryptocurrency. Europe’s new digital asset legislation, Mica, gives Ross’s office a more direct role by tasking it with establishing a comprehensive framework for regulating crypto assets, although plans for Esma to license Europe directly. largest crypto asset service providers were eventually suspended.

Three questions for Verena Ross

Who is your leadership hero?

Not a single person. I’ve learned a lot from the people I’ve worked with, and I’ve learned different things from each of them. . . Leadership is such a personal thing.

What would you be if you weren’t a leader/chairman?

I wanted to be an archaeologist. So I actually studied archeology for six months, and then I started to worry a little bit about collecting dust in a museum.

What was your first leadership lesson?

When making the transition from technical expert to leader, resist the temptation to delve too deeply into things. You need to make sure you understand enough to ask the right questions and listen carefully to the answers from the experts, but not to be the technical expert.

Ross is no stranger to breaking new ground in finance. When she was appointed to lead Esma, having a woman in such a role was unusual enough for a parliamentarian to describe her words as “sweet and gentle” at a public hearing.

By the time she was appointed chair in 2021, the world had changed and she had joined the growing ranks of women leading major financial institutions, such as Christine Lagarde at the European Central Bank and Elke König at the Single Resolution Board of the European Union. euro zone. She is aware that gender is “something people have taken into account when making certain choices” and wary of the role it has played in her life.

“I hope I managed to reach the position” [I’m in]not just because I’m a woman, but also because I have a certain experience and knowledge that people appreciate and believe I can do the job,” she says.

“Being recognized as a female leader is not my first motivation,” she later adds when asked about hope for her legacy. “I want to be recognized for being an honest and inclusive leader who brings people together to get the best out of themselves.”

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