EC’s new Capital Markets Union Action Plan drives equity consolidated tape forward

Dan Barnes

The European Commission has published a new Action Plan to boost the European Union’s Capital Markets Union (CMU) over the coming years. The EU’s top priority today is to ensure that Europe recovers from the unprecedented economic crisis caused by coronavirus. Developing the EU’s capital markets, and ensuring access to market financing, are seen as being essential in this task.

Large and integrated capital markets are hoped to facilitate the EU’s recovery, making sure that businesses – in particular small and medium-sized businesses – have access to sources of funding and that European savers have the confidence to invest for their future. Capital markets are also intended to support Europe’s green and digital transition, as well helping to create a more inclusive and resilient economy. The Capital Markets Union is crucial to boost the international role of the euro.

Valdis Dombrovskis, executive vice-president for ‘An economy that works for people’ said. “The coronavirus crisis has injected real urgency into our work to create a Capital Markets Union. The strength of our economic recovery will depend crucially on how well our capital markets function and whether people and businesses can access the investment opportunities and market financing they need. We need to generate massive investments to make the EU economy more sustainable, digital, inclusive and resilient. Today’s Action Plan aims to tackle head-on some of the remaining barriers to a single market for capital.”

The Action Plan has three key objectives:
• Ensuring that the EU’s economic recovery is green, digital, inclusive and resilient by making financing more accessible for European companies, in particular SMEs;
• Making the EU an even safer place for individuals to save and invest long-term;
• Integrating national capital markets into a genuine EU-wide single market for capital.

To do this, the Commission is putting forward today sixteen targeted measures to make real progress to complete the CMU. Among the measures announced today, the EU will:
• The Commission will propose the creation of an effective and comprehensive post-trade consolidated tape for equity and equity-like financial instruments;
• The Commission will consider introducing an EU definition of ‘shareholder’ and further clarifying and harmonising rules governing the interaction between investors, intermediaries and issuers;
• The Commission will consider amending rules to improve the cross-border provision of settlement services in the EU;
• The Commission will work towards an enhanced single rulebook for capital markets by assessing the need for further harmonisation of EU rules and monitoring progress towards supervisory convergence;
• Create a single access point to company data for investors;
• Support insurers and banks to invest more in EU businesses;
• Strengthen investment protection to support more cross-border investment in the EU.
• Facilitate monitoring of pension adequacy across Europe.
• Make insolvency rules more harmonised or convergent;
• Push for progress in supervisory convergence and consistent application of the single rulebook for financial markets in the EU.

©The DESK 2020