EC published the action plan to enhance the Capital Markets Union in EU over the coming years. The action plan proposes sixteen legislative and non-legislative actions with three key objectives. These objectives involve supporting a green, digital, inclusive, and resilient economic recovery by making financing more accessible to European companies; making the EU an even safer place for individuals to save and invest long-term; and integrating the national capital markets into a single market. EC also published a set of questions and answers (Q&A) and a factsheet on this action plan.
EC has largely delivered on the actions announced in the 2015 action plan on the Capital Markets Union and the 2017 mid-term review of the action plan. The European Parliament and member states agreed on 12 out of 13 legislative proposals, although not all of them have maintained the level of ambition proposed by EC. However, certain barriers to a single market remain. even after all of the already proposed legislative measures start to apply. Therefore, the initial set of the Capital Markets Union actions needs to be complemented with new measures, including the ones that address the new challenges that have emerged. With this new action plan, EC sets out a list of measures to make decisive progress toward completing the Capital Markets Union. The action plan includes the following key actions:
- As part of the various measures to support a green, digital, inclusive, and resilient economic recovery by making financing more accessible to companies, EC will adopt a legislative proposal in the third quarter of 2021 to set up a European single access point (ESAP). This platform shall provide seamless, EU-wide access to the relevant financial and sustainability-related information disclosed to the public by companies, including financial companies.
- As part of the review of Solvency II, by the third quarter of 2021, EC will assess whether the legal framework could be amended to further promote long-term investment by insurance companies, without harming financial stability and policyholder protection. In its work on implementing Basel III, when reviewing the Capital Requirements Regulation and Directive (envisaged for adoption by the first quarter of 2021), EC will apply the flexibility embedded in Basel III to ensure that appropriate prudential treatment of long-term small and medium size enterprise (SME) equity investments by banks.
- To facilitate access to finance for SMEs, by the fourth quarter of 2021, EC will analyze the merits and feasibility of setting up a referral scheme to require banks to direct SMEs whose credit application they have turned down to providers of alternative funding.
- To scale up the securitization market in EU, by the fourth quarter of 2021, EC will comprehensively review the securitization framework for simple, transparent, and standardized (STS) and for non-STS securitizations.
- EC will work toward an enhanced Single Rulebook for capital markets by assessing the need for further harmonization of EU rules and monitoring progress toward supervisory convergence. It will take stock of what has been achieved in fourth quarter of 2021 and consider proposing measures for stronger supervisory coordination or direct supervision by ESAs. EC will also carefully assess the implications of the Wirecard case for regulation and supervision of capital markets and act to address any shortcomings identified in the EU legal framework.
Establishing the Capital Markets Union is essential for supporting a resilient and inclusive economic recovery and the green and digital transition. EC will start work on the actions announced in this action plan by launching public consultations on the legal framework for European long-term investment funds and non-bank insolvency shortly. EC will complement its regular reporting of progress on legislative action with monitoring of how EU capital markets are evolving, based on a set of targeted indicators.
Keywords: Europe, EU, Banking, Insurance, Securities, Action Plan, Capital Markets Union, ESG, Climate Change Risk, Solvency II, CRR/CRD, Basel, Securitization, Single Rulebook, Sustainable Finance, EC
Previous ArticleEC Proposes Frameworks for Crypto-Assets and Operational Resilience
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
The Hong Kong Monetary Authority (HKMA) is consulting on the draft Financial Institutions (Resolution) Ordinance (Cap. 628), or FIRO, Code of Practice chapter on liquidity and funding in resolution, until March 14, 2022.
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).