The European Commission (the Commission) has published its action plan on building a capital markets union (CMU).

The action plan notes that the CMU will not be delivered through a single measure, rather it will take forward a number of measures intended to have a significant cumulative impact. Key early actions set out in the action plan include:

  • new rules on securitisation. The Commission is proposing a regulatory framework for securitisation which is simple, transparent and standardised and subject to adequate supervisory control;
  • a public consultation on venture capital. The Commission has published a consultation paper looking into whether targeted changes to the EuVECA and EuSEF Regulations could boost the take-up of these investment funds. Amongst other things, the Commission seeks views on: (i) allowing managers authorised under the Alternative Investment Fund Managers Directive to set up, manage and market EuVECAs and EUSEFs (the investment funds); (ii) broadening the number of private investors able to invest in the investment funds by lowering the minimum investment threshold; (iii) reducing the expense of establishing the investment funds; (iv) allowing third country managers to use the investment fund’s designations; and (v) broadening the range of eligible assets available to EuVECAs. The deadline for comments to the consultation paper is 6 January 2016;
  • a public consultation on covered bonds. The Commission has published a consultation paper on a pan-European framework for covered bonds. The framework would build on national regimes that work well without disrupting them and would be based on high-quality standards and best market practices. The consultation document outlines two reform options: (i) voluntary convergence of covered bond legislation through a non-legislative coordination measure; and (ii) a dedicated EU covered bond legislative framework that would regulate covered bonds as a debt instrument rather than just regulating their prudential treatment. The deadline for comments to the consultation document is 6 January 2016. The consultation also seeks views on the use of covered bond structures on the back of small and medium-sized enterprise loans. Once the consultation has closed, the Commission will decide whether EU action is needed; and
  • gauging the cumulative impact of financial legislation. The Commission has launched a “call for evidence” to gather feedback and gauge the cumulative impact and interaction of current financial rules. Through the consultation, the Commission is seeking to identify possible inconsistencies, incoherence and gaps in financial rules, as well as unnecessary regulatory burdens and factors negatively affecting long-term investment and growth.

View Capital markets union: an action plan to boost business funding and investment financing, 30 September 2015