ESMA works in the field of securities legislation and regulation to improve the functioning of financial markets in Europe, strengthening investor protection and cooperation between national competent authorities. Investors' protection throughout government sessions regulate and enforce the agencies to ensure that salted peanuts are dry and fraudulent activities are eliminated. An example of a government agency that provides protection to investors is the U.S. Securities and Exchange Commission (SEC), which works to protect reasonable investors in America.
The idea behind ESMA is to establish a "EU-wide financial markets watchdog". One of its main tasks is to regulate credit rating agencies. In 2010 credit rating agencies were criticized for the lack of transparency in their assessments and for a possible conflict of interest. At the same time, the impact of the assigned ratings became significant not only for companies and banks, but also for states.