FEE CMU Policy Update

July 2016


European Commission


Commission issues proposal to reform EU venture capital rules – 14 July

The European Commission has published its long anticipated Regulation to reform the EU venture capital framework, by the introduction of changes to two existing venture capital Regulations (345/2013 on venture capital funds and 346/2013 on social entrepreneurship funds). The proposal forms a part of the EU’s CMU Action Plan. The above-mentioned Regulations established the framework for the so-called EuVECA (venture capital) and EuSEF (European social entrepreneurship) funds. The proposed amendments in particular:

  • Extend the range of managers eligible to market and manage EuVECA and EuSEF funds;
  • Expand EuVECA eligible assets;
  • Decrease costs and burdens.

Both the European Parliament and the Council will subsequently form their respective positions on the Commission proposal, and then negotiate (‘trilogues’) in order to find a compromise. The process will take several months at the very least. On top of the amending Regulation, the Commission will take additional measures in order to further revamp the European venture capital sector. These include:

  • The Commission is considering how it can use EU budgetary support to attract capital from major institutional investors through a pan-European venture capital fund-of-funds. The Commission plans to publish soon a call for expression of interest from private sector asset managers interested in managing the fund-of-funds;
  • The Commission is also studying how national tax incentives for venture capital and business angels can foster investment in SMEs and start-ups, and will promote best practice across the EU;
  • And finally, the Commission is developing a strategy for providing technical assistance to Member States to develop and improve market-based finance, including venture capital.



Commission publishes summary of responses to the consultation on retail financial services – 14 July

The European Commission has published a summary of received responses to its public consultation on retail financial services. Unsurprisingly, the consultation responses revealed visible differences between types of respondents. For example, consumer organisations emphasised the need for simpler and better products but not necessarily more products for cross-border sales, whilst firms tended to argue that there is insufficient demand from consumers who would simply not want to purchase products when sold cross-border.



Fears grow Brexit will slow Capital Markets Union” – 17 July

According to the Financial Times (article only available to subscribers), many stakeholders are expecting the CMU project to lose some political momentum as a result of the Brexit. At the same time, asset managers fear that they will be left on the side-lines. Fears are also growing that a UK departure might lead to less industry friendly rules in the CMU.



Remarks by Vice-President Dombrovskis at the Atlantic Council – 18 July

The Commission Vice-President Valdis Dombrovskis, now responsible for the CMU dossier, has delivered a speech for the occasion of an Atlantic Council meeting. In his speech, Mr. Dombrovskis emphasises that a CMU is a high priority despite a prospective Brexit. He lists a number of measures expected for this year, including a proposal to further harmonise insolvency procedures across the EU, as well as assessing the case for a EU framework on personal pensions. The Commission is, moreover, working on follow-up to the call for evidence on EU financial sector legislation, with the view of ensuring that it is proportionate, fit for purpose and not too burdensome on the industry.



Public consultation on a potential EU personal pension framework – 27 July

The European Commission has launched its long-anticipated public consultation on a possible EU personal pension framework. The consultation (and any proposal that comes out as a result of it) links directly to the Commission’s CMU project. The establishment of a EU personal pensions framework would seek linking retail investors, and specifically long-term savers, with long-term investment opportunities.

The consultation maintains that the key features of a EU personal pensions framework are trustworthiness, cost effectiveness and transparency. It asks for relevant stakeholders’ views on each of these areas. Transparency specifically involves ensuring the provision of relevant information on personal pension products to consumers. Key dimensions here are the nature (information requirements), frequency of disclosure and presentation of information. The consultation states that:

  • Individuals should be appropriately informed of the key features of personal pension products;
  • Distinction should be made between:
    • Information provided before subscribing to a personal pension product;
    • Information provided to savers during the product lifetime.
  • Possible options range from:
    • Using existing models (KID, PRIIPs et al.) with appropriate adaptations;
    • Designing a more specific and tailored set of information requirements.
    • Projections could also be a feature of the disclosure requirements.

In terms of next steps, the deadline for providing comments is 31 October. Any follow-up action is expected months afterwards, once the Commission has properly analysed the received stakeholder input.



 European Parliament


Hearing with Commissioner Dombrovskis in ECON Committee – 6 July

The Commission Vice-President Valdis Dombrovskis has appeared at a hearing of the European Parliament ECON Committee. The Vice-President is picking up the CMU dossier from the ex-Commissioner Hill who resigned as a consequence of the Brexit vote. During the hearing, the Vice-President committed to continuity, and emphasised that Brexit makes the CMU even more important. With regard to the call for evidence, the Vice-President emphasised that the Commission will look into issues of proportionality, effects on the availability of funding and costs of compliance of current EU financial sector legislation.



ECON Committee votes on Prospectus Regulation, Plenary vote to follow in autumn – 13 July

The ECON Committee of the European Parliament has voted on its draft report on Prospectus Regulation – a dossier led by the MEP Petr Jezek (ALDE/CZE). The ECON Committee report was intended to form the formal negotiation position of the Parliament in the upcoming trilogues with the Council, after which the negotiation outcome would have been submitted for Plenary. Against these expectations, however, the report will go to Plenary this autumn after all, thereby delaying the legislative process by months.

During the vote, a number of compromise amendments were adopted. Of particular interest, the following amendments on the so-called EU Growth Prospectus (applicable to SMEs for example) were approved:

  • Wide application of incorporation by reference, including of financial information;
  • Focus on information that is material from investors’ point of view;
  • Ensure proportionality between the size of the company and its fundraising needs;
  • Need to reduce the costs of preparation.

As with the Commission proposal, the Parliament draft report leaves the European Securities and Markets Authority (ESMA) with the freedom of establishing, on a technical level, the exact disclosure requirements and formats based on political guidance from the three main institutions. It remains to be seen whether the Plenary vote in autumn will significantly alter the ECON Committee position.



 MEP Questions & Answers


Simple, transparent and standardised (STS) securitisation proposal – 8 July

The European Commission has replied to a question asked by the MEPs Marco Zanni (EFDD/ITA) and Marco Valli (EFDD/ITA) with regard to the Commission proposal on simple, transparent and standardised (STS) securitisation. In their question, the MEPs ask the Commission why it has not addressed the apparent issue of aggregate demand which they maintain is at the root of the financial crisis, why the Commission is subsidising the “shadow banking” sector as a means of ensuring financing for SMEs, and why it has decided to reduce the risk weight for senior securitisation exposures to 10%. In his reply, ex-Commissioner Hill maintains that the securitisation proposals form a part of wider reforms designed to increase funding channels whilst reducing borrowing costs. Moreover, he states that the proposal entails no subsidies whatsoever, and are designed merely to support the “normal functioning of markets”. And finally, the Commission based its risk weight reduction on “empirical analysis” conducted by the European Banking Authority (EBA).




Sustainability in the Capital Markets Union – 22 July

The European Commission has replied to a question asked by the MEP Reinhard Bütikofer (Greens-EFA/GER) with regard to sustainability in the CMU. In his question, Mr. Bütikofer asks the Commission whether it will create a “multi-stakeholder process” in order to properly insert climate and other Environmental, Social and Governance (ESG) risks into EU financial sector legislation, whether it will do so in the context of the 2017 review of the CMU, and whether it will develop a “sustainable finance strategy” as part of the anticipated EU2030 strategy. In his reply, Vice-President Dombrovskis argues that the Commission has already undertaken several initiatives focusing on climate and sustainability, including a consultation on the degree to which institutional investors take ESG issues into account. Moreover, at the G20 level guidelines for voluntary company disclosures of climate-related reporting are under preparation – which the Commission follows closely. The Commission will take this work into account when it prepares its own non-binding non-financial reporting guidelines by the end of 2016.




Financing of small businesses – 22 July

The European Commission has replied to a question asked by the MEP Ivan Štefanec (EPP/SVK) with regard to financing for small businesses. In his question, Mr. Štefanec asks the Commission whether it is planning further measures to simplify funding for SMEs through venture capital funds. In her reply, Commissioner Bieńkowska (internal market, industry, entrepreneurship, SMEs) refers to the recently published Commission proposals on venture capital (see article above in the European Commission section) as examples of measures that the Commission has taken towards this direction.





27/09/2016, Next steps on ESAs: funding and governance, Financial Future, Brussels.

08/11/2016, Cross-border distribution of funds, Financial Future, Brussels.

06/12/2016, Pan-European Personal Pension products, Financial Future, Brussels.

07/12/2016, FEE 30 years’ anniversary, Federation of European Accountants (FEE), Brussels.