Capital Markets Union: a welcome start

The Commission’s proposals for a Capital Markets Union are a welcome and necessary step in promoting a sustainable economic recovery across the EU. In particular, they provide an opportunity to create a properly-functioning Single Market in capital by diversifying funding and improving investment opportunities across the EU. The proposals aim to spread and mitigate risk throughout the financial system, while at the same time tackling problematic regulatory and administrative barriers and the deep-rooted cultural obstacles to growth that have held back economic recovery in the EU. We support the Commission’s proposed approach, including a mix of short-, medium- and long-term measures and a range of legislative and non-legislative tools. We particularly welcome the commitment to ensuring that Capital Markets Union is for all 28 Member States. The Commission’s Green Paper is a helpful starting point for these discussions, although the sheer quantity of proposals it sets out creates a danger of a lack of focus. A good starting point is to identify those measures that are most necessary to support the Commission’s jobs and growth agenda. To that end, we welcome the publication of a consultation on reviewing the Prospectus Directive. A careful balance must be struck between easing the burden on issuers (an entity that sells new securities to raise funds), particularly SMEs, and ensuring that consumer protection is not weakened. Indeed principles of consumer and investor protection should underpin all aspects of Capital Markets Union. While securitisation markets suffered considerable damage during the financial crisis, they have a key role to play in managing and transferring risk in the financial system. We therefore welcome the Commission’s consultation on developing a framework for high quality securitisation, which will build on the attempts of the European Central Bank, the Bank of England and the European Banking Authority to revive the subdued EU securitisation market. Yet considerable obstacles remain. We also welcome the Commission’s emphasis on promoting and developing the private placement market and on enhancing the availability of credit information on SMEs.