On 24 September the European Commission published its second Capital Markets Union (CMU) action plan. It came as no surprise, as the Commission had already announced its ambition to further its first CMU action with a new plan. This time, instead of the usual stakeholders consultation, the Commission set up a High Level Forum to put forward proposals. The Forum delivered its proposals last Spring, and the Commission took the summer to reflect on these suggestions, and receive comments from stakeholders, including the European Parliament Economic and Monetary Committee (ECON), who adopted a report with its own wish list on 10 September.
The political motivations behind this action plan represent quite a few of the challenges the EU is currently facing, namely the competitiveness of the EU vis à vis other financial centres exacerbated by Brexit, the need to ensure more equity financing for EU companies, and last but not least the economical circumstances of the Covid-19 crisis.
This 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.
The very diverse measures include an EU single access point to company data for investors, a modification of capital requirements for banks to ease SME financing, a review of the current securitisation framework, withholding tax and insolvency law reviews, financial education, a focus on investors with reflections on inducements, disclosure, information. To be noted also a push on supervisory convergence, as well as considerations on how to avoid another Wirecard scandal.
These initiatives will translate into legislatives proposals which will be published in the next 12 to 18 months, in order to be adopted by the co-legislators before the end of this European Parliament’s mandate (May 2024). These proposals are no surprises, as they reflect some of the shortcomings of the previous CMU and take onboard comments highlighted by various groups, including the High Level Forum on CMU and the Markets4Europe initiative.
The ABBL has been actively contributing to the debate around the CMU project in the different fora, as well via the Markets4Europe campaign together with the EBF. The ABBL will remain active in the discussion to come with the EU institutions and stakeholders.
According to Gilles Walers, Legal Adviser with the ABBL: “The European Commission’s CMU Action Plan comes at a crucial point in time for the European economy and tackles some of the biggest issues existing in today’s EU financial markets – bridging the fragmentation of the national markets and providing the means for a competitive and thriving real economy of tomorrow financed by healthy and liquid financial markets. With a focus on the diversity of banking industries present on the Luxembourg market, the ABBL thoroughly welcomes all of the EC’s actions, namely those on stronger securitisation, more sustainable and more digital economies, as well as a long-outstanding reform on withholding taxes.”
The banking industry is an integral part in this process and the ABBL will, together with its membership, ensure that the Luxembourg financial sector remains a serious contender within European financial markets by focusing on its strengths and pushing for necessary innovation to foster new opportunities, thereby strengthening the entire EU framework and adapting to national specificities.
By Aurélie Cassou