(Reuters) — The European Union needs to study the rise of special purpose acquisition companies, but it is too early to say if they are a “bubble,” the executive director-designate for EU securities watchdog ESMA said on Thursday.

SPACs have begun attracting big names in European finance, with former UniCredit boss Jean-Pierre Mustier teaming up with France’s richest man Bernard Arnault to launch a SPAC that will be listed in Amsterdam and aimed at European financial deals.

Dubbed “blank check” companies in the United States, SPACs have attracted billions of dollars in investment on Wall Street and their popularity has spilled over into Europe.

“They beg the question for us in Europe, what that means and whether we are comfortable with our existing rules,” Natasha Cazenave told the European Parliament.

SPACs list on a stock exchange to raise capital and then have up to two years to use the proceeds to buy existing companies.

They have become a popular alternative for startups wanting to go public with less regulatory scrutiny than they would otherwise face with an IPO.

There have only been 10 SPAC listings in Europe in 2020 and 2021, with a total value of about $1.3 billion - figures dwarfed by the United States where 522 such listings have brought in over $300 billion, end-March data from Refinitiv shows.

“We need to understand why they are so popular, why do people provide money just on the basis of the sponsors’ names and announcement of a project,” said Ms. Cazenave, who is currently deputy secretary-general of French markets watchdog AMF.

“It’s too soon to make a determination... and what should be the appropriate response from a European perspective,” Ms. Cazenave said.

European and U.S. regulators will try to limit the market “exaggerations” seen in January and February by scrutinizing business plans more closely and asking advisers to undertake more due diligence on deals, said Sven Baumann, Citi’s head of investment banking in Germany.

“One measure is likely going to be that regulators ban a SPAC from talking to other potential targets once they have agreed exclusivity with another target to pursue a merger agreement,” Baumann said.

Armin Heuberger, managing director at Swiss lender UBS in Germany, said he expects 30 to 60 SPAC listings in Europe this year.

Britain’s Financial Conduct Authority has said it will consult on rule changes for SPACs as Britain tries to attract SPACs to list in London.

The U.S. securities regulator SEC has opened an inquiry into Wall Street’s blank check acquisition frenzy and is seeking information on how underwriters are managing the risks involved.