The chairman of the European Securities and Markets Authority has called for an overhaul to the watchdog’s “twisted and inappropriate funding system”, including greater use of market-based fees and less reliance on contributions from national regulators.

The budget given to Esma - which is one of three EU supervisory bodies set up in response to the financial crisis - is currently derived from three sources: the European Union's budget, contributions from European member states, and fees from entities it has direct supervision over, namely credit rating agencies and trade repositories for OTC derivatives.