New ESMA powers could redraw the EU market

In brief

• EU finance ministers adopted a common position on market integration and supervision on 9 October.
• The Council supports direct ESMA supervision for significant cross-border infrastructures, but this is not yet final EU law.
• For Hungarian retail investors, the practical issues are cost, product choice and oversight of cross-border services.

The Council of the European Union adopted its negotiating position on the market-integration and supervision package on 9 October. This is the common mandate of EU finance ministers; the legislation still requires negotiations with the European Parliament. The Hungarian stake is direct because many funds, brokers, trading venues and crypto-asset providers accessible from Budapest operate across several member states.

The Council says ESMA would directly supervise significant cross-border trading venues and key central securities depositories and clearing houses. The proposal would also strengthen supervisory convergence. This is an institutional change, not a return promise: fees, execution quality and investor protection will depend on the final text and implementation.

What changed and how large is the gap?

The European Commission package says, “Simplified access to capital markets reduces costs”. Its 2024 comparison puts EU stock-market capitalisation at 73% of GDP, against 130% in the United Kingdom and 270% in the United States. These are not returns and do not cover identical company sets; the indicator compares listed equity-market size with annual economic output.

Our calculation makes two differences visible. The EU gap to the UK is 57 percentage points: 130 minus 73. The gap to the US is 197 points: 270 minus 73. As a ratio, the US figure is about 3.70 times the EU figure because 270 divided by 73 equals 3.6986. A larger market is not automatically better or safer, but it can support more issuers, deeper liquidity and more funding channels.

The method is reproducible. We subtracted the three 2024 percentages published by the Commission to obtain percentage-point gaps and divided the US figure by the EU figure for the ratio. The first chart compares levels; the second shows the static distance to the UK and US ratios. It is not a forecast because GDP and share prices both change.

Channels for Hungarian investors

The first channel is provider cost. Easier cross-border trading and settlement services may increase competition, but customers benefit only if intermediaries pass through lower operating costs. Account, foreign-exchange, transaction and product charges should therefore be compared separately.

The second channel is supervision. Direct ESMA oversight may reduce national interpretation differences for comparable significant infrastructures. Yet Hungarian complaints, taxation and some consumer-protection rights can still involve several authorities. Centralisation does not remove the role of the Magyar Nemzeti Bank or domestic rules.

The third channel is product choice and currency. More EU issuance or easier distribution could broaden euro-denominated investments. For a household saving in forints, however, EUR/HUF also changes the result. Forint appreciation can offset part of an euro asset’s gain, while depreciation can amplify it; fund and platform fees remain additional costs.

Our related article covered the Eurogroup debate on the savings union, while today’s global close review records the market setting. The IMF assessment of Hungary provides domestic growth and fiscal context. None of these identifies a suitable product for an individual saver.

Three scenarios and the next decision

In the base case, Council and Parliament retain the core of direct ESMA supervision but limit it with precise thresholds. The effect would be gradual: legal and IT adaptation first, possible fee and product changes later. Retail investors should watch total costs, execution venues and complaint routes.

In the favourable scenario, more uniform rules reduce fixed cross-border costs, more providers enter smaller markets and choice improves. In the adverse scenario, overlapping EU and national requirements temporarily increase compliance costs that providers pass through in fees. Market stress would also test how quickly ESMA and national authorities can decide together.

The next confirmed milestone is the Parliament’s negotiating position, followed by institutional talks. Until then, the Council text is a political mandate, not a rule in force. Final thresholds, transition periods and fee-disclosure provisions will show how much centralised supervision reaches services available in Hungary. This analysis provides scenarios and a measurement framework, not personalised buy or sell advice.