On June 21, the new Communication forms the Commission’s contribution to the Euro Summit.
It takes stock of the progress made to deepen EMU since the publication of the Five Presidents’ Report: Completing Europe’s EMU on June 22, 2015. READ MORE
Capital Markets Union
European Commission Calls on European Parliament and the Council of the EU to Accelerate Work on Completing CMU
On November 28, the European Commission published a communication (COM(2018) 767 final) on the capital markets union (“CMU“). The Commission outlined that the CMU is a key priority for a number of reasons:
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completing the CMU is essential to make member state economies more resilient and to safeguard financial stability;
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the CMU will offer more choice to consumers allowing them to buy cheaper and better investment products;
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the CMU will enable financial service providers to scale-up by offering their services in other member states.
Since 2015, only three of the Commission’s original proposals contributing to the CMU have been adopted and 10 of 13 proposals are under discussion by EU legislators, including proposals on the pan-EU personal pension product and an EU covered bonds framework. The Commission calls on the European Parliament and Council of the EU to accelerate the remaining proposals before the May 2019 Parliament elections.
The full communication can be found here. The annex was published separately alongside an FAQs document.
ECB Publishes Opinion on Proposed Regulation Amending EBA Regulation
The European Central Bank (“ECB“) published an opinion (CON/2018/19) (dated April 11, 2018) on a proposed Regulation amending (among other things) the EBA Regulation (Regulation 1093/2010) on April 12, 2018.
The proposed Regulation forms part of the European Commission’s legislative proposals for reforms to the European System of Financial Supervision (“ESFS“), which were published in September 2017. In November 2017, the Council of the EU requested an opinion from the ECB on the proposed Regulation.
In the opinion, the ECB welcomes the proposed Regulation’s objective of fostering effective and consistent prudential supervision and regulation across the EU. It supports further integration of the supervisory framework at EU level for the banking sector and strengthening supervision by re-examining the current set-up of the European supervisory authorities (“ESAs“) (that is, ESMA, EIOPA and the EBA).
The opinion sets out the ECB’s general observation that the banking union and the capital markets union (“CMU“) are at different stages of progress. The review of the ESAs should not necessarily produce three identical outcomes for the three ESAs, but should address their respective mandates and functions.
The ECB considers that certain of the proposed amendments to the EBA Regulation do not adequately distinguish between the scope of the ECB’s microprudential supervisory tasks and the EBA’s competence to set regulatory standards to promote supervisory convergence. It states the importance of avoiding duplication or inappropriate allocation of tasks, as this could blur the responsibilities of the two authorities and render the system less effective overall.
The ECB also makes some specific observations in the opinion concerning the revised EBA governance framework, strategic supervisory plans, stress testing and independent reviews of national competent or supervisory authorities.
A technical working document accompanied by an explanatory text is appended to the opinion, setting out the ECB’s proposed amendments to the text of the proposed Regulation.
The ECB has decided to adopt separate opinions on the Commission’s legislative proposals for reforms to the ESFS, so it advises that the opinion should be read in conjunction with an opinion it published in March 2018 on a proposed Regulation amending the European Systemic Risk Board (ESRB) Regulation (Regulation 1092/2010).
EU Covered Bonds Framework: Proposed Legislation
On March 12, 2018, and further to its action plan on building a capital markets union (“CMU“), the European Commission published a draft Directive and Regulation on covered bonds in line with its aim to create an integrated EU covered bonds framework.
The Commission’s proposed Directive sets out the conditions that covered bonds must satisfy to be recognized under EU law. It also strengthens investor protection by imposing specific supervisory duties. The proposal for a Directive is complemented by a proposal for a Regulation amending Regulation (EU) No 575/2013 (the “Capital Requirements Regulation“).
European Commission Calls to Accelerate the Capital Markets Union Reforms
On September 14, 2016, the European Commission published a communication calling for an acceleration of the capital markets union (CMU) reforms (COM(2016) 601 final) in light of the current political and economic context.
Elements of particular interest to financial services practitioners include:
- The Commission will support the co-legislators in reaching an agreement by the end of 2016 on the modernization of the prospectus rules;
- The Commission calls on both the European Parliament and the European Council to finalize the Regulation amending the European Social Entrepreneurship Funds Regulation (Regulation 346/2013) (EuSEF Regulation) and the European Venture Capital Funds Regulation (Regulation 345/2013) (EuVECA Regulation) also by the end of 2016;
- The prospect of a legislative proposal being tabled in 2017 relating to a simple, efficient and competitive EU personal pension product;
- To reduce capital charges attaching to investments by insurers in infrastructure corporates, the Commission will adopt an amendment to the Solvency II Delegated Regulation (Regulation (EU) 2015/35);
- In the hope of strengthening retail investor participation in capital markets and opening up the EU market for retail financial services, the Commission will present an action plan on retail financial services.
The Annex to the communication also provides an update on the CMU action plan initiatives.
Steps Towards a Capital Markets Union
The European Commission is consulting on a blueprint for creating a harmonized capital market across the EU, to facilitate capital raising in the EU while maintaining consumer and investor protection by simplifying the prospectus regime. The Commission is also consulting on an EU framework for securitization, hoping to improve credit information for SMEs, and is supporting the EU Private Placement Initiative. The consultation asks whether an EU private placement market should be created, with some of the same features as the successful US model for fixed rate debt instruments.
The review and capital markets union consultation will close on May 13, 2015, with a report expected by July 2015. Overview.
European Commission Publishes Green Paper on Building a Capital Markets Union
On February 18, the European Commission published a green paper on building a Capital Markets Union.
The green paper identifies a number of key priorities to create a fully integrated single market for capital. The early action priorities include relaxing rules around securitization, reviewing the prospectus regime, widening the small and medium-sized investor base by ensuring comparable cross-border credit information and credit-scoring, developing private placement markets by introducing common market practices, principles and standardizes documentation and boosting long-term investment through the European Fund for Strategic Investment and the European Long-Term Investment Funds regulatory framework.
The Commission will publish an action plan later in 2015 to identify and remove barriers for the free movement of capital, and aims to have in place a fully functioning Capital Markets Union by 2019. Green Paper.