The Council made public its position on the Capital Markets Union (CMU) on 19 June during its Economic and Financial Affairs formation meeting. It welcomed the Commission’s initiative of building a CMU and supported to the Commission’s step-by-step approach based on a thorough analysis and consultation of all the key stakeholders, including market participants, which combines long-term ambition, using the CMU as a lever for growth and investment, with key short term concrete actions producing visible, early impact to gather momentum.
It also recalled the importance of increasing retail investment and ensuring robust investor and consumer protection, by combining, with a focus on synergy and efficiency, actions by the national supervisory authorities and by the ESAs in the exercise of their existing mandates, when developing the CMU project and emphasised that the principles of subsidiarity and proportionality should be respected and that financial market stability should not be put at risk.
It was stated that the CMU should encompass all 28 Member States, while taking account of the various degrees of development of capital markets and their different levels of size and integration, and that, notwithstanding such differentiations, the benefits of integrated capital markets should be reaped throughout the entire EU, by both those with large existing capital markets and those with smaller ones.
Further, the Council clarified that work on the CMU should take into account international work to understand and, if necessary, address financial stability risks in capital markets, as well as any consistency issues and stressed the need to ensure that EU’s capital markets can compete on a fair basis with other economic areas, based on sound financial regulation (this needs addressing barriers to the free movement of capital).
In the short-term the Council calls on the Commission to propose a framework for simple, transparent and standardised securitisation, building on the numerous ongoing initiatives at EU and international levels, as a matter of priority at the latest by the end of 2015, including a clear overarching definition of such securitisations, ensuring consistency of the common key aspects across different sectoral legislations, and a sound mechanism for verifying qualifying securitisations, and areas where these deserve a preferential treatment and appropriate calibration.
Furthermore, it confirmed the need to simplify and streamline the process for preparing and, where appropriate, approving the prospectus, ensuring an appropriate balance between achieving adequate investor protection and confidence and minimising the burden on businesses and looks forward to considering the legislative proposal that is being prepared by the Commission.
A long-term structural policy agenda should go beyond initiatives in the field of financial services as building an effective CMU will also require further analysis of possible barriers in related areas such as insolvency, securities and company law whilst also having regard to the respective tax treatments of equity and debt financing with a view to fostering neutrality between the fiscal treatment of these, taking into account the importance of national competences in these areas. Hence, the importance of working on addressing these barriers to ensure the long-term success of the CMU (technical work in these areas needs to start promptly).
It was also noted that there is a need to ensure adequate supervision of relevant segments of the capital markets and to strengthen the macro-prudential toolkit beyond banking, and specifically into the areas of investment, securities and shadow banking, in order to reap the potential benefits from financial integration through the development of the CMU, without raising concerns for financial stability.
For all the above-mentioned reasons the Council encourages the Commission to elaborate by September 2015 a comprehensive, targeted and ambitious action plan for building the CMU which should be grounded on a roadmap with clear prioritisation of actions and a timeline with clear and realistic milestones. Further, it mentions that policy interventions should be adjusted in response to ongoing monitoring before, during and after implementation to address any unintended consequences on the basis of ex-ante policy indicators and ex-post impact assessments.
In other words, the CMU plan has had its formal kick-off with the view of having some tangible proposals made public by the end of the summer.