EC Announces Recommendations for Completion of Capital Markets Union
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.
Related Links
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
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Michael Denton, PhD, PE
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
Related Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
