Speakers of the session
Chair, European Securities and Markets Authority (ESMA)
MEP & EPP Coordinator, Committee on Economic and Monetary Affairs, European Parliament
Directeur du Service du Financement de l’Economie, Ministry of Economy and Finance, France
Director General, Financial Market Policy, Federal Ministry of Finance, Germany
Director, Financial Markets, DG for Financial Stability, Financial Services and Capital Markets Union, European Commission
Chairman, EMEA, BNY Mellon
Vincenzo La Via
Director General of Treasury, Ministry of Economy and Finance, Italy
PhD, CFA, Head of International Structured Finance and Covered Bond Research, Bank of America Merrill Lynch Global Research
Chief Investment Officer, AXA Group
Managing Director, Government Affairs, Goldman Sachs International
Objectives of the sessionThis roundtable will examine the progress made so far with the CMU action plan and whether the short term actions are likely to foster a significant diversification of financing and better opportunities for investors. The key priorities among the longer term objectives of the CMU action plan will also be discussed as well as the way to keep sufficient momentum over time. Finally the importance of technological innovation and fintech solutions for the success of the CMU will be evaluated.
Points of discussion
Is the progress made so far with the CMU sufficient to anticipate a significant improvement by 2019 of access to financing for all businesses across Europe, and more specifically start-ups, SMEs and infrastructure projects?
- What are the key achievements since the launch of the CMU action plan? Which short term actions are expected to have the strongest and fasted impact?
- Will the current CMU actions lead to greater diversity in sources of financing and greater involvement of non-bank institutional or retail investors?
- What are the conditions for these short term actions to be successful? Have any issues / obstacles been identified so far regarding the CMU short term priorities for potential issuers or investors and is progress sufficiently fast?
What key longer term actions of the CMU action plan must be prioritized in order to foster the financing of SMEs and provide better opportunities for investors? How to keep the momentum of the CMU project over time?
- What are the key priorities among the actions of the CMU action plan due to be completed between 2016 and 2018 for facilitating the financing of SMEs? To what extent are actions to further integrate capital markets and improve supervisory convergence a priority for SMEs in particular? What are the key issues regarding tax for the success of the CMU?
- What is needed for making EU capital markets work more efficiently (trading and post-trading) and achieving deeper capital markets? How to make the connections between investors and those who need funding more effective, both within Member States and cross-border?
- How to keep sufficient momentum over time in the specification and implementation of the different policy actions proposed in the CMU action plan? How to develop a sufficiently rich and well-performing ecosystem of financial players to support the growth of market-based finance in Europe?
Are technological innovation and fintech solutions a key element of the achievement of the CMU and should their development be more explicitly taken into account in the CMU action plan?
- Should the role of technological innovation / fintech be more explicitly put forward in the CMU action plan and if so in what way? May some fintech developments make some of the CMU work redundant over time, as fintech solutions by-pass or replace some of the legacy systems, procedures and regulations?
- To what extent are CMU objectives (on eliminating barriers, tackling tax problems) essential for reaching the potential benefit of fintech?
Background of the sessionThe CMU, which is a single market project for all 28 Member States (i.e. those with / without a developed capital market) generally aims at strengthening the link between savings and growth, providing more options and better returns for savers and investors and offering businesses more choices of funding – notably in the capital markets – at different stages of their development.
Following the consultations that began in February 2015, the EU Commission (EC) decided to take a “step-by-step” approach combining long-term ambition with quick practical steps. There is indeed no single measure that will deliver a CMU according to the EC, but a range of steps whose impact will be cumulatively significant. First actions were launched at the end of 2015. These include a comprehensive package on securitization for simple and transparent products (STS) with updated calibrations for CRR, revised Solvency II calibrations regarding infrastructure investments and a proposal to review the Prospectus Directive.
A communication from the EC published in September 2015 further describes the Action Plan proposed for implementing the main building blocks of the CMU by 2019. Its objective is to build a single market for capital, remove the barriers which stand between investors’ money and investment opportunities and overcome the obstacles which prevent businesses from reaching investors.
Six main areas are outlined in the CMU Action Plan with corresponding timelines (between the end of 2015 and 2018) which give indications of the priorities proposed by the EC for implementing the different actions that compose the Action Plan. Priorities are due to be reassessed in 2017. The CMU Action Plan is a combination of specific measures and on-going actions conducted by the EC such as: the Call for Evidence, the Green paper on retail financial services and insurance, the calibration of Solvency II requirements. The Action Plan also includes market-led initiatives such as the implementation of a pan-European private placement framework.
1- Providing financing for innovation, start-ups and non-listed companies in order to broaden the range of options available for growing companies: support venture capital and equity financing, overcome information barriers to SME financing and promote innovative forms of corporate financing (e.g. crowdfunding, loan origination by funds).
2- Making it easier for companies to enter and raise capital on public markets: strengthen access to public markets (review of the prospectus directive and of barriers to the access to SME markets), improve bond market liquidity and address the debt-equity tax bias.
3- Investing for the long term, infrastructure and sustainable investment: support infrastructure investment (adjustment of Solvency II calibrations) and ensure the consistency of the EU financial services rulebook considering the output of the Call for Evidence.
4- Fostering retail and institutional investment: increase choice and competition for retail investors (output of the retail Green Paper), help retail investors to get a better deal (EU retail investment product assessment), assess the case for a policy framework to establish EU personal pensions, assess the prudential treatment of private equity in Solvency II and consult on the main barriers to the cross-border distribution of investment funds.
5- Leveraging banking capacity to support the wider economy: strengthen local financing networks (credit unions), build EU STS securitisation markets, consult on an EU-wide framework for covered bonds.
6- Facilitating cross-border investment: remove national barriers to cross-border investment, review the progress made in removing remaining Giovannini barriers to cross-border clearing and settlement, launch targeted action on securities ownership, foster the convergence of business insolvency proceedings, assess measures to remove cross-border tax barriers (e.g. related to withholding tax), strengthen supervisory convergence.