ESMA to put CYBER RISK as a new Union Strategic Supervisory Priority [USSPs]
The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, is changing its Union Strategic Supervisory Priorities (USSPs) to focus on
- Cyber risk and digital resilience and
- ESG disclosures.
With this new priority, EU supervisors will emphasise reinforcing firms’ ICT risk management through close monitoring and supervisory actions, building new supervisory capacity and expertise.
The aim is to keep pace with market and technological developments and closely monitor potential contagion effects of attacks and disruptions across markets and firms.
The new USSP will come into force in 2025, simultaneously with the Digital Operational Resilience Act – DORA.
This timeline intends to provide supervisors and firms in Member States with sufficient time to prepare to comply with the new regulatory requirements.
Meanwhile, ESMA and national competent authorities (NCAs) will plan preparatory work and shape the supervisory activities under this priority.
The new USSP on cyber risk and digital resilience will replace the USSP on market data quality.
ESMA and NCAs have conducted intensive and concerted supervisory efforts to make structural, long-lasting improvements in this area.
Notably, ESMA will have:-
- Built standard data quality methodologies and data sharing frameworks; and
- Worked on detecting supervisory issues, conducted investigations and developed supervisory tools to extract further intelligence from the reported data.
Ensuring data quality remains a primary duty of supervised entities. Firms, and in particular their top management, should take ownership of the data they report and increase its use for internal purposes.
EU supervisors will continue to undertake crucial supervisory work on data quality, leveraging the new methodologies and tools developed through the USSP.
Paying close attention to this topic remains fundamental in building a data-driven supervisory approach, a key strategic objective under the ESMA Strategy.
The USSPs are an important tool through which ESMA coordinates and focuses supervisory action with NCAs across the EU on specific topics.
In addition, ESMA and NCAs will continue their work on the second priority – ESG disclosures.
The aim is to tackle greenwashing, increase investors' understanding and embed sustainability requirements when firms advise investors. ESG disclosures will remain focused in 2024 across key segments of the sustainable finance value chain, such as issuers, investment managers and investment firms.
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