Once again, the European Securities and Markets Authority has expressed dissatisfaction with German rules on supervision – but this time the shortcomings are at a manageable level.

Paris-based ESMA says that the independence of BaFin could be underscored more strongly vis-à-vis Berlin. In addition, the disclosure rules for securities transactions by BaFin employees should be more stringent. ESMA sets out these two points of criticism in a Follow up Report on the Fast Track Peer Review on Wirecard. However it adds that there has been far-reaching progress overall.

Consequences? Presumably none. Unlike in November 2020, when ESMA criticised the rules on balance sheet control in Germany as inadequate, this time the authority is avoiding making a public rebuke. There is no press conference, nor is current ESMA Chair Verena Ross quoted with admonishing words, nor does the accompanying report particularly highlight the criticisms.

Four years after the Wirecard collapse, the follow up report comes rather late. ESMA obviously does not want to be loud with its criticism.

There are good reasons for this. After the rebuke in 2020, when BaFin in particular, but also ESMA, was under pressure following the Wirecard collapse, it is now also a matter of saving face.

EU authorities and Member States do not always share the same opinion. ESMA is therefore keen to emphasise its role as a standard setter, while also respecting the discretionary powers of German politicians and financial supervisors. The result is a gentle rebuke that does not hurt very much.

Reports from regulators, despite all the gobbledygook, can always be interpreted politically. Plenty is said between the lines.

ESMA would indeed be going too far if it wanted to meticulously prescribe the rules in Germany, as long as the shortcomings are not flagrant. In ESMA's judgement, that is no longer the case. Criticism can be voiced at many different noise levels. For good reason, ESMA has chosen a quiet voice.