Refine
Year of publication
- 2020 (3) (remove)
Document Type
- Working Paper (2)
- Part of Periodical (1)
Language
- English (3) (remove)
Has Fulltext
- yes (3)
Is part of the Bibliography
- no (3)
Keywords
- Wirecard (2)
- Auditing (1)
- Banking Supervision (1)
- Capital Markets Union (1)
- Financial Markets (1)
- Fintech (1)
- Internal Controls (1)
- Investor Protection (1)
- Market Integrity (1)
- Market Oversight (1)
Institute
- Sustainable Architecture for Finance in Europe (SAFE) (3) (remove)
The paper discusses the policy implications of the Wirecard scandal. The study finds that all lines of defense against corporate fraud, including internal control systems, external audits, the oversight bodies for financial reporting and auditing and the market supervisor, contributed to the scandal and are in need of reform. To ensure market integrity and investor protection in the future, the authors make eight suggestions for the market and institutional oversight architecture in Germany and in Europe.
The Wirecard scandal is a wake-up call alerting German politics to the importance of securities market integrity. The role of market supervision is to ensure the smooth functioning of capital markets and their integrity, creating trust among and acceptance by investors locally and globally. The existing patchwork of national supervisory practice in Europe is under discussion today, in the wake of Brexit that will end the role of London as a de-facto lead supervisor in stock and bond markets. A fundamental overhaul of a fragmented securities markets supervisory regime in Europe would offer the potential to lead to the establishment of an independent European Single Market Supervisor (ESMS). Endowed with strong enforcement powers, and supported by the existing national agencies, the ESMS would be entrusted with ensuring a uniform market standard as to transparency and other issues of market integrity across Europe. This would not rule out maintaining a variety of market organization structures at the national level. The ESMS would need executive powers in the world of markets (i.e. securities and trading), much like the SSM in the world of banking. To fill this new role, ESMS would have to be established as a new, independent institution, including an enormously scaled up staff if compared, e.g., to ESMA.