Page 10 - BIPAR Annual Report 2020_EN

Capital Markets Union
(CMU)
Background The CMU Action Plan of September 2015 was built around the following key
principles:
The European Union defines the CMU • Creating more opportunities for investors;
as “ways of reducing fragmentation • Connecting financing to the real economy;
• Fostering a stronger and more resilient financial system;
in financial markets, diversifying
• Deepening financial integration and increasing competition.
financing sources, strengthening cross
border capital flows and improving The Action Plan contained a list of actions and (non-) legislative initiatives,
such as on personal pensions or sustainable finance. Indeed, many current
access to finance for businesses,
legislative proposals, for example, the PEPP Regulation, the proposals on
particularly SMEs”. A Green Paper
sustainable finance or the ESAs review are main building blocks of the CMU.
was published in February 2015 in
this respect, followed by an Action The 2017 CMU Mid-Term Review set out priority actions and legislative
proposals on which the Commission wanted to move quickly (for instance,
Plan in September 2015. The follow-
the review of the prudential regime for investment firms and the PEPP
up work consisted of a Mid-Term proposal) and the 2018 Communication (“Completing the Capital Markets
Review in 2017, a Communication to Union by 2019 - time to accelerate delivery), contained amongst others
further Action Plans on Sustainable Finance and Fintech.
accelerate delivery in March 2018 and
a progress report in March 2019. With
In March 2019, the Commission published a Communication on the CMU:
regard to CMU, BIPAR stressed the “Progress on building a single market for capital for a strong economic and
need for the EU to focus on initiatives monetary union”. This 2019 Progress Report takes stock of the completion of
the building blocks of the CMU, stating that the Commission has now tabled
that reduce administrative burden for
all envisaged legislative proposals and stressing the need for the European
(small) firms. BIPAR also stated that, Parliament and the Council to accelerate work on the pending proposals
to remain competitive and attractive, to ensure their completion by the end of the legislative cycle. Finally, the
Commission adds that legislation alone will not deliver the CMU. Member
the EU must avoid overregulation,
States, national authorities and private stakeholders all play a vital role in
that there is a need for stability and
building the CMU. Future action will need to reflect the impact on capital
supervision must be tailored for the markets of the UK’s departure from the EU and other short or medium-
sector. Currently a High Level Forum term economic and societal challenges (such as climate and technological
developments).
on capital markets union is preparing
targeted policy recommendations for In May 2019, the French, German and Dutch finance ministers signed a joint
future CMU actions. The Commission plan, calling for more integrated capital markets in Europe. They point at
climate and technological change, as well as Brexit, making the need for a
is expected to issue a new CMU action
well-designed capital market for the EU to become an urgent strategic issue.
Plan by Q4 2020.
In October 2019, the 3 finance Ministers presented the report of this “Next
Capital Markets Union” high-level working group at the Eurogroup meeting.
The Group suggests amongst others a new name for CMU: “Savings and
Sustainable Investment Union” and invites political leaders to focus on two
EU major objectives:
10
1. Adopting and promoting a capital market that offers saving products to serve citizens’
needs and that allocates capital to value creating investments in the real, innovating and
sustainable economy.
2. Building/strengthening an integrated, competitive, deep and liquid European Capital
Market, to maintain the EU as one of the top 2 financial centres of the world.
Also in October 2019 the European Commission launched the concept of a High Level Forum
on capital markets union which is to propose targeted policy recommendations for future CMU
actions, to ensure that citizens and businesses can access capital markets across the EU on
equal terms and irrespective of their geographical location.
In March 2020 the CMU High-Level Forum published its interim report, stating that the following
measures (among others) could be envisaged to complete the CMU:
- To steer citizens towards long-term investment products,
- To facilitate access to high-quality advice,
- To improve access to simple and transparent investment products,
- To improve access to trustworthy financial advice, including genuinely independent
advice.
On 10 June 2020, the HLF published its final report. It makes (among many other
recommendations and as expected) recommendations to complete the CMU with regard
to fostering retail investment. Examples of the recommendations made for this topic to the
Commission include:
- to examine consistency of IDD IBIPs rules with MiFID rules such as ban on commission
for independent advice for IBIPs;
- to examine the role of inducements for the adequacy of advice,
- to examine how transparency of inducements can be further improved;
- to introduce in IDD and MiFID certificates to prove training;
- to introduce a pan-European quality mark (label) for European financial advisors to be
used on voluntary basis;
- to review asap the PRIIPs Regulation;
- to analyse and assess all relevant disclosure rules in place
The report contains 17 recommendations in total on various issues. The Commission also
launched a consultation on the report, which runs until 30 June and to which BIPAR will respond.
Next steps
In its 2019 Progress Report, the European Commission calls on the European Council to
renew its commitment to the CMU and endorse these efforts for its next Strategic Agenda.
11