On 24 September 2020, the European Commission published its long-awaited Capital Markets Union (CMU) Action Plan. The CMU Action Plan serves as a list of policies the Commission would like to introduce over the upcoming years, together with a timeline for the adoption of concrete legislative proposals. The main objective of the CMU is to create a truly single market for capital across the EU. Acknowledging that capital markets are instrumental for the economic recovery following the COVID-19 pandemic and for the financing of the green transition and the digital transformation of the EU, the Commission proposes initiatives to create a more inclusive economy and increase the EU’s global competitiveness and open strategic autonomy. For the next four years, the Commission has identified sixteen main actions around the following three key objectives:
- Support a green, digital, inclusive and resilient economic recovery by making financing more accessible to European Companies.
- Make the EU a safer place for individuals to save and invest long-term.
- Integrate national capital markets into a genuine single market.
In terms of the actions envisaged to attain these goals, the Commission is planning the following:
- The Commission will publish a legal proposal amending the Capital Requirements Regulation ((EU) 575/2013) and Directive (2013/36/EU) to implement the final Basel III standards in EU law. The European Banking Authority and the Commission have been consulting stakeholders and the public on this matter over the course of 2019 and 2020.
- During this period, the Commission intends to publish an EU financial competence framework to promote a shared understanding of financial competence among public authorities and provide bodies.
- Besides, the Commission will propose to strengthen the investment protection and facilitation framework in the EU.
- A legislative proposal establishing a European single access point, which would provide EU-wide access to all relevant information disclosed to the public by companies, including financial institutions.
- A legislative proposal amending the European Long-term Investment Fund (ELTIF) Regulation (EU) 2015/760). The Commission launched a public consultation on the ELTIF review on 16 September.
- The Commission will assess whether the legal framework could be amended to further promote long-term investment by insurance companies as part of its Solvency II review (Directive 2009/138/EC).
- By this period, the Commission will assess whether the listing rules for public markets under MiFID II ((EU) 2014/65) (both SME growth markets and regulated markets), could be simplified. It will also analyse the merits and feasibility of establishing a referral scheme to require banks to direct SMEs whose credit application they have turned down to providers of alternative funding.
- The MiFID II framework will be reviewed more extensively in this period, with the Commission reviewing the administrative burden and information requirements for a subset of retail investors and will review the investor categorisation more generally. The Commission is also considering introducing a certification requirement for investment advisors and an effective and comprehensive EU-wide consolidated rape for equity and equity-like financial instruments.
- The Commission will also carry out a comprehensive review of the EU securitisation framework (Regulation (EU) 2017/2402) to support banks in providing sustainable and stable funding to the real economy.
- On supervision, the Commission will propose an enhanced single rulebook for capital markets by further harmonising the EU rules. In this, the Commission will consider strengthening the powers of the European Supervisory Authorities.
- Lastly, the Commission will conduct a targeted review of the Central Securities Depositories Regulation ((EU 909/2014) (CSDR), thereby focusing on the cross-border provision of services and the basis of a passport and the authorisation procedures and conditions under which central securities depositories have been authorised to designate banks or themselves to provide banking-type ancillary services.
- During the first months of 2022, the Commission is due to publish the conclusions of its assessment of whether the requirements under the Mortgage Credit Directive (2014/17/EU) to promote learning measures that support consumers’ financial education as regards responsible investment should be expanded to other pieces of EU legislation, such as MiFID II.
- Furthermore, the Commission may propose to amend the existing legal framework on inducements and disclosures to ensure that retail investors receive fair and adequate investment advice and comparable product information.
- A pan-European label for financial advisors, which would complement the establishment of the certification requirement (see Q4 2021), could be proposed during this period as well.
- A legislative proposal establishing minimum harmonisation in targeted areas of core non-bank insolvency is expected before mid-2022.
- Subject to a positive assessment by the EU Member States, the Commission plans to adopt a legislative proposal to introduce a common, standardised, EU-wide system for withholding tax relief at source.
- At the time the review of the Shareholder Rights Directive 2 ((EU) 2017/828) (SRD 2) is due, the Commission will review whether it is possible to introduce an EU-wide definition of ‘shareholder’ and if and how the interaction between investors, intermediaries and issuers can be harmonised with regard to the exercise of voting rights and corporate action processing.