The European Securities and Markets Authority (ESMA) spent 2025 implementing some of its most significant regulatory changes, but its annual report shows that simplifying reporting requirements was a top strategic priority.
Simplification First: Paused MiFIR Amendments to Avoid Overlap
ESMA launched four cross-sector projects targeting duplication in transaction reporting, fund reporting, and the retail investor journey. A notable move was pausing certain MiFIR reporting amendments to prevent market participants from implementing overlapping changes on different timelines. The regulator also published a discussion paper proposing harmonized supervisory reporting under AIFMD and UCITS.
Chair Verena Ross stated: "ESMA launched four ambitious projects to holistically enable simplification and burden reduction in reporting and the retail investor journey, as well as to drive forward risk-based supervision." The push reflects industry pressure to balance investor protection with operational efficiency.
Consolidated Tapes and T+1: Tackling Fragmented Market Data
Market integration was another major theme. ESMA completed the first selection of consolidated tape providers: Fair CT for bonds and EuroCTP for shares and ETFs. These tapes aim to solve Europe's fragmented trading data, which increases costs and reduces transparency.
Preparations for a T+1 settlement cycle also accelerated. Shortening settlement from two days to one reduces counterparty risk and capital requirements, though it requires significant operational changes across brokers, custodians, and asset managers. Ross noted that cooperation between regulators and industry drove the project forward in 2025.
MiCA Implementation: Unified Crypto Authorization Framework
Crypto regulation remained a central focus. As MiCA moved into implementation, ESMA worked with national regulators to establish a common framework for authorizing crypto-asset service providers. It issued convergence guidance and conducted a fast-track peer review of crypto licensing processes. Technical standards covering reporting, white papers, and market surveillance continued development. Ross said: "We have delivered guidance on authorisations, working closely with national supervisors, and issued warnings on risks arising from unregulated crypto-asset products."
AI Oversight Rises: Focus on Market Integrity and Resilience
Artificial intelligence emerged as a growing focus. ESMA expanded work on AI, distributed ledger technology, and DeFi as financial institutions increasingly deploy machine learning across trading, risk management, and compliance. The regulator aims to assess impacts on market integrity, operational resilience, and investor protection. Executive Director Natasha Cazenave emphasized: "Harnessing new technologies and digitalisation are both necessary and urgent to ensure greater efficiency within ESMA."
DORA Takes Effect: 19 Critical ICT Providers Under Direct Oversight
Cybersecurity and operational resilience received significant attention. ESMA, alongside the EBA and EIOPA, operationalized the Digital Operational Resilience Act (DORA). In November 2025, regulators designated the first 19 critical ICT third-party providers subject to European oversight. As financial firms rely more on cloud computing and outsourced infrastructure, DORA sets consistent requirements for operational risk management, cybersecurity, and incident reporting to strengthen sector-wide resilience.