Herewith two interesting papers on the European Commission CMU initiative and action plan, one from CEPs and another one from Deloitte. This will also be one important agenda item for the next European Roundtable meeting, 22 January in Madrid.
Center for European Policy Studies: Light and shadows in Europe’s new Action Plan for Capital Markets Union
The European Commission’s new Action Plan for Capital Markets Union, unveiled on September 30th, consists in a nutshell of a short list of technical proposals and a longer one of (rather general) potential actions. Overall, the plan indeed proposes to achieve some short-term objectives, such as a reduction of listing costs for SMEs, but it lacks long-term vision. The plan bundles actions under rather generic objectives of long-term finance or cross-border investing. Improving the informational infrastructure (e.g. accounting standards, company data) and cross-border enforcement of rules is left to vaguely defined future actions, but these constitute the core of the capital markets infrastructure.
The CMU action plan – the long and winning road
The European Commission has published the much anticipated action plan for the Capital Markets Union (CMU). There is no big, bold individual step at the heart of the CMU to capture attention. Instead the action plan includes 33 initiatives across six chapters which individually would not carry much weight, but cumulatively have the potential to turn fragmented pieces of legislation into a cohesive regulatory framework “to mobilise capital in Europe” and understand how regulatory reforms are affecting the financial services industry.
The initiatives of the action plan fulfil many of the commitments made at the outset of the CMU; a limited legislative programme, greater emphasis on revision and calibration, and removing barriers to cross-border flows of capital. In many respects the action plan is restrained, taking a pragmatic view of what measures are achievable to make regulation work more effectively for a growing economy while respecting the concerns of financial stability. While some of the initiatives may come to nothing (e.g. those on tax and insolvency) the majority of the proposed initiatives will be welcome to the market, especially the call for evidence on the cumulative impact of regulatory reforms.
Alongside the action plan the Commission also published a bundle of documents forming the first actions on the CMU:
- a legislative proposal on securitisation, including a revision to the capital requirements regulation;
- an amendment to the Solvency II Delegated Act (annexes);
- a consultation on venture capital and social entrepreneurship funds;
- a consultation on covered bonds; and,
- a call for evidence on the EU regulatory framework for financial services