The new European supervisory architecture : awareness and implementation in the Maltese financial industry

Abstract

The following study analyses the ‘New Supervisory Architecture’ with respect to regulating and supervising the financial industry as a response to the financial crisis of 2007-2008. This reform has taken place because of the regulatory gaps and supervisory shortcomings that were revealed by the crisis. Consequently the European Commission have requested a high level group to work on establishing a regulatory reform that addresses all financial issues presented by the financial crisis. The de Larosière group have then prepared a report which tackled a wide range of aspects and finally came up with the actual reform. Whilst concerning all aspects of supervision the reform focuses more on the micro level and the national authorities, in fact a European System of Financial Supervisors was established having three sectoral authorities responsible from banking, insurance and pensions and securities. On the other hand the macro level and the protection of financial systemic stability is the responsibility of the European Systemic Risk Board. This reflects the work that is being done at EU level in order to increase harmonisation across different jurisdictions and to have a European single rule book. This supervisory reform has been adopted by the Maltese financial regulator namely the Malta Financial Services Authority since Malta forms part of the European Union, thus any laws and directives that are passed at EU level should be followed by all Member States. Subsequently, this study seeks to examine the new reform and how it was adopted at a national level, mainly by the Maltese Financial Services Authority and what were the changes that it brought up. Additionally an assessment of awareness amongst the local market participants and operators of the Maltese financial industry will be carried out.