EC notified that the High-Level Forum on Capital Markets Union has published its final report on the plan for completion of the Capital Markets Union. The report sets out 17 interconnected recommendations aimed at removing the biggest barriers in the capital markets in EU. According to the report, completion of the Capital Markets Union is particularly important now, as it can speed up recovery of EU from the COVID-19 pandemic. It will be vital for mobilizing much-needed long-term investments in new technologies and infrastructure, to tackle climate change and to deliver the New Green Deal and Digital Agenda of Europe. EC also launched a call for feedback on the report from stakeholders. The feedback period is open until June 30, 2020.
Building on ideas put forward in past reports, the High-Level Forum proposes a targeted plan of key measures to move Capital Markets Union decisively toward completion. Compared to other reports, this report is more granular and includes a timetable for all the key deliverables. The recommendations are grouped into four clusters that cover the full spectrum of capital market activities—the financing of business, market infrastructure, individual investors’ engagement, and obstacles to cross-border investment. The report sets out the following key recommendations:
- The High-Level Forum recommends for EC to duly mandate ESMA to set up the European Single Access Point (ESAP). A single access point would remove one of the main obstacles that discourage investors—especially from other member states or third countries—from accessing smaller national capital markets or from providing funding to small and medium-sized enterprises (SMEs).
- The Forum recommends that EC should propose some necessary, prudentially sound amendments to encourage significantly higher investment particularly in equity, including in SMEs, by carrying out a targeted review of Solvency II. This can also be done by paying due attention to provisions affecting market making and long-term investment in SME equity by banks and non-banks, when implementing the Basel III standards.
- The Forum further proposes that EC should put forward a series of targeted, prudentially sound amendments to improve the EU securitization framework.
- Another recommendation is for EC to review the existing financial legislation to clarify application to crypto or digital assets and, where appropriate, to propose new EU legislation to regulate assets that fall outside the existing regulatory framework.
- EC has been recommended to develop voluntary contractual standard clauses to enable financial institutions to better assess and manage risks related to their reliance on cloud services providers. EC has also been recommended to develop a harmonized legislative framework to ensure the secure use of these services and improve the digital competitiveness of EU by encouraging the development of EU cloud providers.
- The Forum recommends for EC to review, as soon as possible, the Packaged Retail and Insurance-based Investment Products (PRIIPs) Regulation, analyze in detail all the relevant disclosure rules, and consider ways to promote the development of independent digital comparison tools.
- The Forum also recommends for EC to introduce a harmonized open finance regulatory framework covering financial and non-financial information relevant to facilitating financial planning or encouraging investment.
- The Forum recommends that EC should strengthen the ESMA and EIOPA mandate to enhance EU supervisory convergence, including by reforming their governance, strengthening their powers and toolkits, entrusting ESMA and EIOPA with wider powers in crisis management, and ensuring that they are granted adequate resources. To that effect, EC should review the relevant sector-specific legislation as well as the founding regulations of ESMA and EIOPA.
Comment Due Date: June 30, 2020
Keywords: Europe, EU, Banking, Insurance, Securities, COVID-19, SME, Solvency II, Basel III, Securitization, Climate Change Risk, ESG, Capital Markets Union, EBA, ESMA, EIOPA, EC
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleESAs Launch Survey on Templates for Product Disclosures Under SFDR
US Agencies (FDIC, FED, and OCC) finalized two rules, which are either identical or substantially similar to the interim final rules in effect and issued earlier this year.
EIOPA is consulting on a supervisory statement on the use of risk mitigation techniques by insurance and reinsurance undertakings.
APRA announced that it is resuming consultation on the confidentiality of data submitted to APRA by the authorized deposit-taking institutions.
BoE and FCA are supporting and encouraging liquidity providers in the sterling swaps market to adopt new quoting conventions for inter-dealer trading based on SONIA, instead of LIBOR, from October 27, 2020.
Deutsche Bundesbank published special schema files for securities holdings statistics (SHS), along with a document on the XML format description.
EC adopted a decision determining, for a limited period of time, that the regulatory framework applicable to central counterparties, or CCPs, in the UK and Northern Ireland is equivalent to the requirements laid down in the European Market Infrastructure Regulation (EMIR or Regulation 648/2012).
ESMA announced that it will recognize three central counterparties (CCPs) established in the UK as third-country CCPs, from January 01, 2021.
PRA published Version 02.04 of the PRA110 liquidity metric monitoring tool (PRA110 LMM tool).
FSB confirmed the Regulatory Oversight Committee (ROC) of the Global Legal Entity Identifier System (GLEIS) as the International Governance Body for the globally harmonized identifiers used to track over-the-counter (OTC) derivatives transactions, with effect from October 01, 2020.
FCA is consulting on its approach to the authorization and supervision of international firms operating in UK.