On Wednesday 7 June, the European Commission will unveil a series of new initiatives to redirect the planned Capital Markets Union (CMU) to respond to new financial integration challenges, including the departure of the United Kingdom from the single market.
“The future departure of the EU’s largest financial centre from the EU single market makes it necessary to reassess how the CMU can ensure that EU business and investors have access to strong, dynamic and more integrated capital markets”, reads the Commission’s draft communication on the mid-term revision of the CMU, of which EUROPE has had sight.
The original action plan, presented by the Commission in September 2015 (see EUROPE 11399), provided for a programme of 33 actions to be implemented to complete the CMU by 2019. The Commission reports that it has already completed more than half of these and has promised further legislative proposals for the near future on pan-European individual pension savings products, the ownership of cross-border securities and a code of conduct to streamline withholdings tax procedures.
This mid-term review adds new priority actions aiming to create a “more autonomous capital market for the EU-27 economy” to the original timetable. These are a result of the public consultation carried out between January and March 2017.
Reinforcing the effectiveness of supervision to speed up market integration
As announced by the Financial Services Commissioner, Valdis Dombrovskis, at a public hearing on the mid-term review in April 2017 (see EUROPE 11766), the Commission is planning to change the way the European Securities and Markets Authority (ESMA) and the other three European Supervisory Authorities (ESAs) work. In the third quarter of 2017, it will propose measures to bolster ESMA’s powers in certain specific areas.
The association representing European employers, BusinessEurope, which took part in the public consultation, urged the institution not to make major changes to the structure and powers of the ESAs (see EUROPE 11791).
Removing national obstacles to capital flows to facilitate cross-border investment
By 2018, the Commission will examine the possibility of a legislative proposal to facilitate the cross-border distribution of ‘UCITS’ funds and hedge funds, notably by reducing the distribution costs.
The finance ministers of the member states will furthermore be called upon, at the Ecofin Council on Tuesday 23 May, to approve the Commission’s roadmap to removing these obstacles by 2019 (see EUROPE 11792).
Tapping the potential of financial technologies
The Commission is also considering allowing promoters of new digital banking and insurance services to benefit from the European passport and relaxed regulatory requirements.
As part of its global approach to FinTech and on the basis of the public consultation launched in March 2017, the Commission will look at the arguments for such a framework and may propose measures by the end of the year.
Other measures will seek to encourage capital flows to be channelled into projects promoting environmental protection, supporting SMEs listed on the public markets and supporting the development of local and regional financial markets throughout the EU.
These new priority actions will contribute to “laying the foundations for a true CMU by 2019”, in an EU of 27. They will be added to the Commission’s working programme for 2018. (Original version in French by Marion Fontana)