Annexes to COM(2018)767 - Capital Markets Union: time for renewed efforts to deliver for investment, growth and a stronger role of the euro - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2018)767 - Capital Markets Union: time for renewed efforts to deliver for investment, growth and a stronger role of the euro. |
|---|---|
| document | COM(2018)767  |
| date | November 28, 2018 |
bonds
3.1. Making the most of the Single Market through new Union-wide
products and services
The Commission presented in June 2017 a proposal for a Pan-European Personal Pension Product. A Union-wide personal pension product would give citizens more options for their retirement savings, including in a cross-border context. It would also create economies of scale that would benefit savers by giving them access to better products at lower cost. Personal pensions can help addressing the demographic challenges of ageing populations by complementing state-based and occupational pensions, for citizens that wish to do so.
The Commission adopted in March 2018 a proposal for a covered bonds framework. Covered bond markets are among the largest private debt markets in the Union and an important channel for longer term financing. They are instrumental for credit institutions to efficiently channel finance to the real estate market and for publicly guaranteed instruments including some loans to small and medium-sized enterprises.
The Commission put forward in March 2018 a proposal for a framework on crowdfunding, as part of the FinTech Action plan.9 The market for crowdfunding is underdeveloped in the Union compared to other major world economies. One of the biggest hurdles faced by crowdfunding platforms seeking to offer their services across borders is the lack of common rules across the Union. The proposed rules should improve access to this innovative form of finance for businesses in need of funding, particularly start-ups, while ensuring that investors benefit from strong protection and safeguards.
In March 2018, the Commission also made a proposal facilitating cross-border distribution of collective investment funds. Barriers such as national marketing requirements and regulatory fees are detrimental to cross-border distribution of funds. The proposal aims to make cross-border distribution of funds simpler, quicker and cheaper. More cross-border distribution should lead to more opportunities to invest in investment funds pursuing social or environmental goals. The proposed rules should improve the transparency of national requirements, remove burdensome requirements and harmonise diverging national rules.
3.2. Simpler, clearer
and more proportionate rules for businesses
The Commission put forward in May 2017 a proposal to simplify rules and reduce regulatory burdens for market participants in the over-the-counter derivatives market. Initiatives based on a global agreement in the G20 to mitigate the risks related to derivatives transactions that are traded over-the-counter have contributed significantly to improving the stability of the derivatives market. However, the current rules apply to all market participants, from large banks to small financial firms and corporates, in a way that is not always fully proportionate. Against this background, the proposed rules aim to reduce regulatory burdens for market participants. If adopted, the rules could save market participants significant costs without compromising financial stability.
The Commission presented in December 2017 a proposal on more proportionate and effective rules for investment firms. The proposal seeks to establish a more
9 Communication from the Commission to the European Parliament, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the Regions “FinTech Action plan: For a more competitive and innovative European financial sector”, COM/2018/0109 final,
proportionate prudential and supervisory framework for investment firms, calibrated to their size and nature. The new rules would ensure a level playing field between the large and systemic financial institutions while introducing simpler prudential rules for non-systemic investment firms.
The Commission presented in May 2018 a proposal to make it easier for smaller businesses to get financing through capital markets. Small and medium-sized enterprises are often faced with disproportionate regulatory barriers that prevent them from accessing market-based finance. The proposal aims to cut red-tape for small and medium-sized enterprises trying to access 'SME Growth Markets', a new category of trading venue dedicated to small issuers. The proposed rules aim to introduce a more proportionate approach to support the listing of small and medium-sized enterprises while at the same time safeguarding investor protection and market integrity.
In November 2016, the Commission adopted a proposal on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures. Allowing honest entrepreneurs to benefit from a second chance after overcoming bankruptcy is crucial for ensuring a dynamic business environment and promoting innovation. For honest entrepreneurs, the proposal therefore provides for a second chance through debt discharge, in order to give them a fresh start and incentivise entrepreneurship. Moreover, the proposal aims to facilitate the efficient restructuring of viable companies in financial difficulties to avoid insolvency and destruction of going concern value.
The Commission presented in March 2018 a proposal on the law applicable to the third-party effects of assignments of claims. The proposal would significantly enhance legal certainty by determining which national law is applicable to the effects on third parties where a claim is assigned cross-border.
The Commission adopted in October 2016 a proposal for Common Consolidated Corporate Tax Base (CCCTB). The proposal addresses the existing debt-bias in taxation that distorts financing decisions, makes companies more vulnerable to bankruptcy and undermines the stability of the overall economy. The proposal aims to increase tax fairness in the Single Market and level the playing field as well as increase investment into growth-friendly activities such as research and development. Moreover, in light of the difficulties that Member States have to come to unanimous agreement in the Council on major tax proposals, the Commission will shortly present a Communication exploring the possibility of moving to qualified majority voting for certain tax matters.10
3.3. A more efficient supervision of capital markets
The Commission presented in September 2017 a proposal for a review of the European Supervisory Authorities. The proposal was amended in September 2018 to strengthen the supervisory framework in the area of anti-money laundering and terrorist financing. More financial integration requires more integrated and effective supervision. The aim of the proposals is to enhance supervisory convergence and strengthen enforcement - this promotes consistent and more effective supervision. It is therefore important that a meaningful reform of the European Supervisory Authorities and enhanced tasks for the European Banking Authority to contribute to the fight against
10 See also the Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions “The Single Market in a changing world - A unique asset in need of renewed political commitment”, COM
money laundering and terrorist financing are adopted together during the current legislature. More independent governance, strong convergence powers and a sustainable funding framework, as proposed in the review of the European Supervisory Authorities, are equally key to remedy current deficiencies and enhance the efficiency of anti-money laundering supervision.
The Commission put forward in June 2017 a proposal to strengthen the supervision of central counterparties. Central counterparties play a crucial role in integrated capital markets, by mitigating the risks relating to the default of a counterparty to a transaction. In doing so, central counterparties concentrate risks and can become systemically important for the financial system. The systemic importance of central counterparties will continue to grow as requirements for market participants to clear their transactions via a central counterparty phase-in and voluntary clearing increases. The proposed rules would ensure that the supervisory framework of the Union is sufficiently robust to anticipate and mitigate risk from Union central counterparties and from systemic third-country central counterparties servicing Union clients.
In November 2016, the Commission presented a proposal to complete the supervisory regime for central counterparties with a harmonised recovery and resolution framework. This proposal, if adopted, would ensure that both central counterparties and national authorities in the Union have the necessary means to act decisively in extreme situations where central counterparties face severe disruptions. The proposed rules aim to preserve the continuity of the central counterparties’ critical functions while maintaining financial stability. The proposal thus ensures the proper functioning of capital markets, provides certainty for market participants and reduces potential costs associated with the restructuring and the resolution of central counterparties for taxpayers.
3.4. Sustainable finance
Capital markets need to transform and innovate to develop convincing answers to the challenges ahead, including the fight against climate change and addressing resource depletion. To this end, the Commission adopted in March 2018 its Sustainable Finance Action Plan11 and has already delivered three concrete legislative proposals, namely on taxonomy, disclosures relating to sustainable investments and sustainability risks and low carbon benchmarks. The objective is to enable the financial sector of the Union to lead the way to a greener and cleaner economy. The proposals should help to reorient private capital flows towards more sustainable investments, such as clean transport and energy, and help finance the transition to a low-carbon, more resource-efficient and circular economy. These initiatives confirm the global leadership of the Union in fighting climate change and promoting sustainability in line with the Paris Agreement and the 17 Sustainable Development Goals of the United Nations.
4. Developing local capital markets
The Commission has also supported the Capital Markets Union by developing local capital markets through non-legislative measures. Local capital markets need to be developed and well-connected into financial centres to bring the benefits of the Capital
11 Communication from the Commission to the European Parliament, the European Council, the Council, the European Central Bank, the European Economic and Social Committee and the Committee of the
Markets Union to all Member States. This requires an adequate balance of scale benefits with local presence to make the best use of domestic savings and attract international investors in order to respond to the financing requirements of local entrepreneurs. The Commission is following up on the work of the Vienna Initiative Capital Markets Union Working Group.12 Several Member States have prepared capital market strategies, created dedicated schemes to support the listings of small and medium-sized enterprises, including with public funds, and some Member States, in particular Central, Eastern and South-eastern Europe countries, have decided to strengthen their capital market supervisory capacity. The Structural Reform Support Service of the Commission has been providing tailor-made technical and financial support to numerous initiatives related to the Capital Markets Union so far, on the request of Member States. This is important to implement capital markets reforms.
5. Conclusion
The Capital Markets Union is essential to make the economy of the Member States and the Economic and Monetary Union more resilient and to foster convergence, to safeguard financial stability and to strengthen the international role of the euro. The Commission calls on the co-legislators to act now, before the European Parliament elections in 2019, to put in place all the necessary key building blocks for a complete Capital Markets Union.
The European Council is invited to renew its commitment to the Capital Markets Union and endorse these efforts, which are essential not only for the Economic and Monetary Union and the Banking Union, but also for the Single Market.
Alongside the legislative reform agenda, the Commission is also committed to delivering the remaining non-legislative actions announced in the Mid-term review of the Capital Markets Union. These actions provide key contributions towards deep and liquid capital markets by addressing important areas such as the distribution of retail investment products, institutional investment, corporate finance for entrepreneurs and start-ups and a better use of financial technologies.
The Commission will also continue engaging with Union citizens, social partners and businesses on the importance of the Capital Markets Union through relevant communication activities.
Reforming the capital markets cannot be achieved by the Commission alone. All stakeholders at the national and Union level must also step up their commitment and do their part. The Commission will continue to support these efforts.
12 In March 2018 the Working Group on Capital Markets Union published its report, http://vienna-