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Boosting Europe’s capital markets – CMU 2.0?

Boosting Europe’s capital markets – CMU 2.0?

The European Commission has published its follow-up to the Capital Markets Union (CMU) mid-term review.

Jon Hogan

Director Regulatory Affairs, International Standards Group

KPMG in the UK


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KPMG contributed its views to the review earlier this year (see here), where we encouraged a continued focus on breaking down national barriers to cross-border investment. The revised priorities from the European Commission show an evolution rather than a change in direction for CMU, with some acceleration in timelines because of Brexit.

Potentially the most significant new priorities will be reviewing the role and powers of the European Securities Markets Authority (ESMA). As previously covered (see here), the European Commission is consulting on changes to the European Supervisory Authorities which could see them be given greater powers to intervene in national supervision to enforce EU legislation. Strong supervision is undoubtedly a key part of well-functioning capital markets, and ESMA has an important role to ensure greater consistency, whether this requires increased powers is less clear.

Other areas of priority over the next 12 months include:

  • Reducing regulatory requirements for corporates accessing SME Growth market listings
  • Recalibrating capital requirements for smaller banks and other investment firms
  • Introducing EU licencing and passporting for FinTech
  • Creating a non-performing loans (NPL) secondary market

Existing CMU actions where progress is expected over the next months are: Pan European Personal Pensions Products (expected June 2017); Conflict of laws rules for third party effects of transactions in securities and claims (Q4 2017); and, EU framework for covered bonds (Q1 2018). As well as ongoing work on private equity, private placements and tax.

CMU has always been about lots of seemingly small changes adding up to something bigger. Critics argue for something more ambitious, but as experience shows even small changes are hard fought.

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