Capital markets integration and supervision: Master regulation [EU Legislation in Progress]

Written by Issam Hallak.

CONTEXT

The European Union’s competitiveness and prosperity depends on an optimal allocation of resources, particularly savings, within the single market, yet EU capital markets remain fragmented. EU rules are mostly set out through directives, leaving Member States’ supervisory authorities latitude in their interpretation and application of the rules. Therefore, although rules are enacted at EU level, the resulting uneven supervisory environment is considered a major cause of fragmentation of EU capital markets. EU-level supervision and regulation thus constitute instruments to ‘de-fragment’ – i.e. ‘integrate’ – the EU’s capital markets.

On 4 December 2025, the European Commission issued a package of three proposals to address this situation (the ‘Market integration package’), as part of its savings and investments union strategy. The proposal to amend 14 regulations – entitled the ‘Master regulation’ by the Commission – would primarily transfer supervisory powers to the European Securities and Markets Authority (ESMA) in some specific markets and areas, strengthen its coordination instruments, and modify its governance. This proposal also aims at removing barriers to cross-border activities and trading.

LEGISLATIVE PROPOSAL

2025/0383 (COD) – Proposal for amending Regulations (EU) No 1095/2010, No 648/2012, No 600/2014, No 909/2014, 2015/2365, 2019/1156, 2021/23, 2022/858, 2023/1114, No 1060/2009, 2016/1011, 2017/2402, 2023/2631 and 2024/3005 as regards the further development of capital market integration and supervision within the Union – COM(2025) 943, 4 December 2025.

NEXT STEPS IN THE EUROPEAN PARLIAMENT

For the latest developments in this legislative procedure, see the Legislative Train Schedule: 2025/0383 (COD)

Read the complete briefing on ‘Capital markets integration and supervision: Master regulation‘ in the Think Tank pages of the European Parliament.