Verena Ross struggles to put her finger on the most challenging time in an almost 30-year regulatory career that began in the UK before bringing her to mainland Europe as executive director of the EU’s new markets regulator in 2011, and its chair in 2021.
Was it her earliest days in Paris, when the European Securities and Markets Authority was trying to expand from a 35-person start-up while also shepherding the EU’s markets through an unprecedented sovereign debt crisis?
Or was it when the Covid-19 pandemic hit, and Ross had to confront the same practical issues as leaders of other organisations, while also trying to make sure that Europe’s markets did not buckle under the most unusual and unpredictable of circumstances?
She cannot really say, and she clearly has not given much time considering it. The no-nonsense German-born regulator is more of the getting-on-with-it type, and in any case, her most challenging time may lie ahead of her.
Esma has the unenviable task of dealing with the fallout from Brexit by maintaining good day-to-day relations with UK supervisors and trying to guide the politically explosive row about where trades for the EU’s marketplace should be cleared — or intermediated — by companies such as the UK’s LCH and pan-European stock market operator Euronext.
Ross’s 300-person strong agency is also one of the flag-bearers for Europe’s capital markets union programme, a grand but so far elusive political project to replicate the US’s achievement in channelling trillions of dollars from households and savers into debt and equity issued by companies of all shapes and sizes.
Esma is now trying to set policies for some of the most intricate areas of traditional markets, while making its mark in new realms such as sustainability, where it is leading a transparency drive, and cryptocurrency, where it will soon assume responsibilities for directly overseeing parts of Europe’s industry.
“One of the challenges of these jobs is just how broad it is, you need to know the remit of what is going on, because you never quite know where the next issue might be coming from,” she says. “But within that you clearly need to prioritise . . . where the core themes are at any point in time.”
In October, Esma unveiled its strategy for the next five years, ticking the traditional boxes of fostering effective markets and preserving financial stability, as well as the modern ones including enabling sustainable finance and facilitating innovation and the use of data.
The 54-year-old tries not to delve as deep into the weeds as her natural instincts would take her, reminding herself that she is not the technical expert she once was in her early career as an analyst at the Bank of England. She is also conscious of not “hovering over” her successor as Esma director, Natasha Cazenave, whom she praises effusively. She says her new job as chair is “quite different” to her old one.
“I am really concentrating on the chairing of the board meeting, setting the agenda, trying to drive the strategy and the vision of where we want to go, and also concentrating as chair a lot on the external representation of the authority,” she says.
Esma must balance the EU and member states’ priorities with the regulator’s core objective of safeguarding Europe’s markets. Clearing, a once obscure part of market infrastructure which has become emblematic of the EU’s attempt to sever ties with London’s financial centre, is one area where Ross’s two masters seem to be in conflict.
The EU’s politicians, led by financial services commissioner Mairead McGuinness, have been emphatic that clearing must move from London, where it is mostly done now, to the EU. In April, McGuinness likened the situation to cutting the EU’s over-dependency on energy from Russia, comments that suggest nothing less than London’s complete capitulation will sate Brussels. The financial services industry, from London to Frankfurt to Paris, argues that moving clearing wholesale from the UK capital would increase both risks and costs.
“Our approach has been around identifying where there are areas with excessive reliance [on London], specific systemic risk we need to deal with,” says Ross, who describes herself as a “committed European at heart”. “It’s more about making sure that there are alternatives in the European Union rather than a binary choice [between London and the EU] . . . I think the important thing is that there is strong European clearing infrastructure, and the possibility to clear in Europe for these systemic instruments and services.”
For now, London continues to do most of the EU’s clearing and Ross says day-to-day relations with the UK authorities have been “working pretty well”. Could anything be done to make relations even better? “I think there is the wider question, which is not really in our remit, about how the relationship between the UK and the EU, more politically, develops but that is not really for us to comment on,” she says, displaying the “just get on with it” approach she’s adopted in the six years since the Brexit vote, though she describes the UK’s decision as something that made her “very sad” as someone who spent her formative professional years in London.
The regulator, who studied Chinese and economics at London’s School of Oriental and African Studies, is similarly diplomatic about capital markets union, arguing that “important steps have been made”, though she admits that the concept can be “difficult to grasp” for the average person.
From the financial crisis to Brexit and Covid, many of the issues that have made headlines during Ross’s time at Esma were things her agency had to react to. Sustainability and crypto regulation offer a chance for Ross and her team to be on the front foot.
Esma has been at the vanguard of the fight against greenwashing, including developing a European framework for sustainability disclosures last year.
Ross believes her agency — one of many looking at climate change issues in the financial services sector — “has an important role to play . . . in making sure that the retail investor at the end understands what they are buying” given the “huge demand” for green products.
“It’s not easy because it’s very much an evolving picture with different pieces of legislation coming in quite quick succession,” Ross says. Esma is also constrained because it is “not the direct supervisor” and so has to rely on national authorities to follow its guidance, as Esma does in much of its work.
Esma has spent the past few years publicly warning European investors of the dangers of putting their money into cryptocurrency. Europe’s new digital assets legislation, Mica, gives Ross’s agency a more direct role by tasking it with establishing a comprehensive framework for regulation crypto assets, though plans for Esma to directly license Europe’s largest crypto asset service providers were ultimately shelved.
Three questions for Verena Ross
Who is your leadership hero?
No single person. I learnt a lot from the people I’ve worked with, and I’ve learnt different things from each of them . . . Leadership is such a personal thing.
What would you be if you weren’t a leader/chair?
I wanted to be an archaeologist. So I even did six months of studies of archaeology, and then I was getting a bit worried that I might gather dust in a museum.
What was your first leadership lesson?
When you transition from being a technical expert to a leader, you have to resist the temptation to delve too deeply into things. You need to make sure that you understand enough to ask the right questions, and listen properly to the answers of the experts, but not to be the technical expert.
Ross is no stranger to breaking new ground in finance. When she was appointed to lead Esma, having a woman in such a role was still unusual enough for a parliamentarian to describe her words as “sweet and soft” in a public hearing.
By the time she was appointed chair in 2021, the world had changed, and she joined the growing ranks of women leading large financial institutions, such as Christine Lagarde at the European Central Bank and Elke König at the eurozone’s Single Resolution Board. She is conscious that gender is “something that people have taken into consideration when making certain choices” and circumspect about the role it has played in her life.
“I hope I managed to get to the position [I’m in], not just because I’m a woman, but also because I have a certain experience and knowledge that people appreciate and that they believe I can do the job,” she says.
“It’s not my first motivation to be recognised as a female leader,” she later adds when asked about hopes for her legacy. “What I want to be recognised for is being a fair and inclusive leader that brings people together to achieve their best.”