The European Securities and Markets Authority (ESMA) in October 2024 released its first 2023 annual report detailing sanctions and measures imposed under various financial regulations. The report covers enforcement actions across multiple EU legal frameworks.
In 2023, Denmark, Finland, Iceland, Norway, and Sweden showed wide and varied enforcement activities, with various discrepancies attributable to varying national regulatory priorities, resources, market sizes, cultural and legal traditions, and historical contexts.
Background
The European Securities and Markets Authority (ESMA) released its annual report on sanctions and measures imposed under various financial regulations in 2023.
This document provides an overview of the enforcement actions taken across multiple regulatory frameworks, including:
- the Alternative Investment Fund Managers Directive (AIFMD),
- the Benchmarks Regulation (BMR),
- the Central Securities Depositories Regulation (CSDR),
- the European Crowdfunding Service Providers Regulation (ECSPR),
- the European Market Infrastructure Regulation (EMIR),
- the Market Abuse Regulation (MAR),
- the Markets in Crypto-Assets Regulation (MiCA),
- the Markets in Financial Instruments Directive II (MiFID II) and Regulation (MiFIR),
- the Prospectus Regulation (PR),
- the Securities Financing Transactions Regulation (SFTR), and,
- the Undertakings for Collective Investment in Transferable Securities Directive (UCITS).
Across all sectors reveals in 2023, a total of €71m in administrative fines were imposed. The report highlights the lag between the adoption of new regulations and the establishment of a supervisory and enforcement practice, which explains the absence of sanctions under newer regulations like MiCA and ECSPR. The annexes to the report provide a sector-specific analysis of sanctions and measures imposed under each regulatory framework.
In 2023, ESMA reported various sanctions and measures imposed across all five Nordic states – Denmark, Finland, Iceland, Norway, and Sweden – under different regulatory frameworks. These sanctions reflect the enforcement actions taken by national competent authorities (NCAs) to ensure compliance with financial regulations.
Denmark, and the ESMA Sanctions Report 2023
Denmark was notably active in imposing sanctions under several regulatory frameworks. Under the Central Securities Depositories Regulation (CSDR), Denmark imposed two administrative measures. Although the specific nature of these measures was not detailed, they contributed to the overall enforcement landscape in the country.
Additionally, Denmark was highly active under the Markets in Financial Instruments Directive II (MiFID II) and Regulation (MiFIR), imposing 42 administrative sanctions and measures. These sanctions were primarily related to organisational requirements under Article 16 of MiFID II, which mandates firms to establish adequate policies and procedures to ensure compliance with regulatory obligations.
Denmark also imposed sanctions under the Prospectus Regulation (PR) and the Undertakings for Collective Investment in Transferable Securities Directive (UCITS), although specific figures for these were not provided. Moreover, the total value of administrative fines imposed under MiFID II and MiFIR in Denmark was not specified, .
- AIFMD: 27 administrative sanctions/measures.
- MiFID II: 42 sanctions/measures.
- CSDR: 2 administrative sanctions/measures.
Finland, and the ESMA Sanctions Report 2023
Finland saw limited enforcement activity in 2023.
No administrative sanctions or measures were imposed under the Market Abuse Regulation (MAR), reflecting a relatively low level of detected non-compliance or a high level of adherence to the regulation.
However, under the European Market Infrastructure Regulation (EMIR), Finland imposed administrative sanctions and measures, contributing to the total of 22 sanctions across six member states.
The specific number of sanctions imposed by Finland was not detailed, but the aggregate value of fines under EMIR across all involved member states was EUR 368,991.
- MiFID II: 1 sanction/measure.
- EMIR: 1 administrative penalty/measure with a total value of €60,000.
Iceland, and the ESMA Sanctions Report 2023
Iceland was particularly noted for its significant enforcement action under MiFID II and MiFIR.
In 2023, Iceland imposed the highest total administrative fine under these regulations, amounting to EUR 7,760,000. This fine was related to breaches of conflicts of interest requirements, general investor protection principles, and the provision of information to clients.
Additionally, Iceland imposed sanctions under the Prospectus Regulation (PR), contributing to the total of 31 administrative sanctions and measures across five member states.
The specific value of fines imposed by Iceland under the PR was not detailed, but the aggregate amount for all involved member states was EUR 240,071.
- MiFID II: 5 sanctions/measures with a total value of €7,777,968.
- MAR: 2 administrative measures and sanctions with a total value of €508,305.
Norway, and the ESMA Sanctions Report 2023
Norway was active in imposing sanctions under the CSDR and the PR.
Under the CSDR, Norway imposed the highest administrative fine among the involved member states, amounting to EUR 88,968. This fine was part of the total aggregate amount of EUR 124,558 imposed under the CSDR across four member states.
Additionally, Norway imposed sanctions under the PR, contributing to the total of 31 administrative sanctions and measures across five member states.
The specific value of fines imposed by Norway under the PR was not detailed, but the aggregate amount for all involved member states was EUR 240,071.
- CSDR: 1 administrative sanction/measure with a total value of €88,968.
- MiFID II: 1 sanction/measure.
- MAR: 8 administrative measures and sanctions with a total value of €1,047,438, and 4 criminal sanctions with a total value of €3,149.52.
Sweden, and the ESMA Sanctions Report 2023
Sweden was notably active under the MAR, imposing 35 administrative measures and sanctions. These sanctions were primarily related to the prohibition of insider dealing and the unlawful disclosure of inside information under Article 14 of MAR, as well as the requirement for issuers to inform the public of inside information as soon as possible under Article 17(1) of MAR.
The total value of administrative fines imposed under MAR in Sweden was not specified, but the aggregate amount for all involved member states was EUR 45,946,420.
Additionally, Sweden was one of the Member States approving the highest number of prospectuses in 2023, although no administrative sanctions or measures were imposed under the PR since 2020.
- MAR: 35 administrative measures and sanctions with a total value of €756,579.
Analysis
The enforcement actions taken by Denmark, Finland, Iceland, Norway, and Sweden in 2023 under various regulatory frameworks highlight, if anything, the mass discrepancies of the enforcement landscape.
Denmark was particularly active under MiFID II and MiFIR, while Finland’s enforcement actions were more limited. Iceland imposed significant fines under MiFID II and MiFIR, reflecting serious breaches of regulatory requirements. Norway was active under the CSDR and the PR, imposing substantial fines to ensure compliance. Sweden’s enforcement under MAR underscores its focus on preventing market abuse and maintaining transparency.
But is this enforcement discrepancy a problem? Well, that depends.
The enforcement landscape across the five Nordic states varies due to several factors. Each states has its own enforcement priorities, leading to different interpretations and implementations of EU/EEA law. Resource allocation also plays a significant role; as states with more financial and human resources can conduct more thorough investigations and impose more sanctions. The size and complexity of financial markets influence enforcement actions, with larger markets like Sweden’s seeing more activity compared to smaller ones like Iceland’s.
Cultural and legal traditions shape regulatory approaches, with some states adopting stricter compliance measures while others focus on guidance and cooperation. Historical contexts, such as past financial crises or scandals, have led some states to develop more robust enforcement mechanisms.
Moreover, public and political pressure can drive regulatory actions, with strong public demand for financial integrity leading to more proactive enforcement. Legal and procedural differences also impact the speed and effectiveness of enforcement actions, with some states having more streamlined processes.
These factors collectively, inter alia, explain the significant differences in enforcement landscapes among these Nordic states, despite their geographical proximity and similar economic and political environments.
Read the ESMA Sanctions Report 2023
The report, published in October 2024, can be read here, along with an accompanying dataset.