Retaining our prominent role in Europe
The financial world has become far more international than it was twenty years ago. One key factor that fuelled this development – from an oversight perspective – was the financial crisis in 2008. Today, over 80% of all our financial legislation is of EU origin, reflecting the important role that Brussels has come to play in AFM practice – and vice versa, since the AFM also has an important position within Europe.
Right from the start, the AFM has wholeheartedly supported the European project. This is because we are convinced that international collaboration results in more effective supervision and creates a level playing field. That level playing field is important to prevent international corporations from exploiting the ‘weakest’ link in Europe. Our commitment to creating a level playing field across Europe, therefore, means that we also protect the interests of Dutch consumers and financial institutions.
Growing need for international collaboration
So due in part to the financial crisis, the importance of international collaboration has only increased over the years. This is also reflected in the establishment of a number of European umbrella supervisors (see box). For us, the introduction of the European Securities and Markets Authority (ESMA) in 2011 was essential. Former AFM director Steven Maijoor was its first chair. Over the past decade, ESMA has experienced a transformation, evolving from a support secretariat into an institute and supervisor with a dominant influence on policy.
Mutual learning
The international playing field of supervisors shows few countries whose supervisor expresses opinions on a wide range of issues. A small group of countries take the lead in this regard; they include France, Germany and the Netherlands. The European supervisors have however developed into an open community in which supervisory authorities are able to learn from each other. For example, Spain has developed a smart action plan designed to tackle aggressive advertising by investment clubs.
Deliberate strategy
We owe our strong European position to several factors: our active approach, the impact of Brexit and a deliberate strategy. When we reviewed our strategy in 2020 we also introduced the International Influence programme. Thanks to the structured approach promoted by this programme, we now have an influence on the subjects that are the most important to us. We need that focus due to the countless changes that are taking place in international laws and regulations.
National, international, most international
The international impact on a sector depends on three criteria: first, how international is the regulatory context; second, how intensive is the international collaboration in supervision and is there an international structure for this; and third, to what extent do the providers engage in cross-border activities (the market structure). The international impact is quite strong particularly in the capital markets and the investment sector, where providers not only work in a highly international regulatory context but also tend to do business internationally. The impact in the insurance and pensions sectors is smaller, but growing. And while audit and reporting supervision is subject to international standards, its implementation tends to have a clear national focus.
International supervisory organisations
CEAOB: Committee of European Auditing Oversight Bodies (2016) ESMA: European Securities and Markets Authority (2011) EBA: European Banking Authority (2011) EIOPA: European Insurance and Occupational Pensions Authority (2011) ESRB: European Systemic Risk Board (2010) IFIAR: International Forum of Independent Audit Regulators (2006) IAIS: International Association of Insurance Supervisors (1994) IOSCO: International Organization of Securities Commissions (1983)
Brexit
In 2020, Brexit caused many trading platforms to relocate to Amsterdam. Today, the Dutch capital boasts a larger trading volume than any other city in Europe and plays a leading role in the European financial sector. For us, this has meant an even stronger role for the AFM within Europe – besides a great deal of extra work. However, the departure of the United Kingdom also means that we have lost a key ally. We often shared the same views on international policy issues. This loss was another important reason for us to launch the International Influence programme. However, the AFM has since intensified collaboration with a number of other countries, including France. For example, we have jointly explored the theme of sustainability in relation to rating agencies, and also focused on cross-order services.
Cherishing our position
We have a good reason for cherishing our prominent position and trying to retain it. Within Europe, our risk-based supervision is fairly exceptional; other supervisors tend to pursue a rules-based approach. At the same time, we are under increasing pressure to deploy formal enforcement. In international peer reviews, we are regularly asked why we hand out so few fines. However, for us it is important to be able to retain our own approach. Another dilemma is the fact that at times, the Netherlands favours more stringent regulations than those at the European level. For example, there is a ban on commission-based selling in the Netherlands, in contrast to many other countries. At the same time we strongly advocate a level playing field, which means we sometimes have to compromise on our ambitions.
International employees
The increasingly international regulatory context has contributed to the growth of the AFM. It has become difficult to find any employee in our supervision departments who has no international contacts. The number of international employee secondments and exchanges is also increasing. For example, one AFM employee was assigned a temporary role at the SEC in the United States and others have worked at the European Commission, the European Insurance and Occupational Pensions Authority (EIOPA) and ESMA. Our own workforce includes several colleagues with an international background, and more and more of our publications (also) appear in English. This is why our organisation's profile has become much more international than it was twenty years ago. In addition to attracting more work, internationalisation has also increased our appeal for new professionals.