FEE CMU Policy Update

December 2015


European Commission

Executive summary of the Commission’s impact assessment to the review of the Prospectus Directive – 1 December

The European Commission has published an executive summary of the results of its impact assessment on a review of the Prospectus Directive. Of particular interest, the impact assessment results indicate that stakeholders would like to see prospectuses that are more relevant to investors, less burdensome for SMEs and better aligned with other EU-level disclosure requirements. Moreover, stakeholders would like to see different disclosure rules tailored for specific issuer groups, and welcome the suggested Q&A format for the SME Proportionate Disclosure Regime (PDR). As a reminder, the Commission proposal for a Prospectus Regulation replacing the Directive was published on 30 November 2015.



Member States agree on Commission proposal for simple and transparent securitisation, Commission welcomes the decision – 2 December

EU Member States (the Council) have endorsed Commission proposals for the establishment of a Simple, Transparent and Standardised (STS) Securities. According to the Commission, the Council’s decision will form a “good basis” for negotiations with the European Parliament. Both institutions will have to agree on the proposal before it can become EU law. Commissioner Jonathan Hill stated for the occasion that he is looking forward to a quick agreement between the Council and the European Parliament. Commission proposed a Regulation establishing STS Securitisations on 30 September 2015.



Speech by Commissioner Jonathan Hill at the Euromoney Capital Markets Union Forum – 3 December

Commissioner Jonathan Hill has given a speech for the occasion of the Euromoney Capital Markets Union forum that took place in early-December. In his speech, Commissioner Hill re-iterates the rationale behind Commission plans for the establishment of better integrated capital markets in the EU, and lists a number of key initiatives that will contribute to the project, including a reform of the Prospectus Directive (as proposed on 30 November last year), new proposals on securitisation (as put forward on 30 September), as well as the ongoing call for evidence on the cumulative impact of the variety of EU financial sector legislation that was introduced following the eruption of the financial crisis. He moreover provides a re-cap of legislative proposals to be anticipated, including measures to support venture capital, publication of a report on crowdfunding which might provide indications of potential Commission action in the area, the establishment of a feedback mechanism whereby banks indicate why they have declined SME credit applications, potential EU-level measures to foster simple personal pension markets in Europe, by the end of 2016 a legislative initiative on insolvency, as well as addressing the debt-equity bias. Overall, the speech contained no particular new elements.



Commission publishes Green Paper on retail financial services – 10 December

The European Commission has launched a Green Paper and a public consultation on retail financial services. The purpose of Green Paper is to discover best ways of improving choices, transparency and competition in the field of retail finance, including cross-border. The deadline to provide views is 18 March.




IOSCO publishes report and statement on crowdfunding – 22 December

The International Organization of Securities Commissions (IOSCO) has published a report on crowdfunding. The report, titled Crowdfunding 2015 Survey Responses Report, gathers views from 23 IOSCO members, with the aim of improving IOSCO’s understanding of various regulatory systems on crowdfunding as well as discovering emerging trends in the sector. A variety of regulatory approaches by jurisdictions exist, but all regulatory regimes are only in early stages. Furthermore, the report assesses possibilities for finding a balance between fostering crowdfunding and ensuring apt investor protection, and for this purposes puts forward a set of recommendations, including the establishment of disclosure requirements for issuers and funding portals, addressing challenges emerging from cross-border practices, as well as limiting the services that may be provided by crowdfunding platforms.



Other News

“AFME calls for better functioning equity markets in Europe” – 2 December

According to FTSE Global Markets, the Association for Financial Markets in Europe (AFME) has recently published a report on the state and opportunities of equity markets in Europe. Overall, the report argues that Europe’s economic potential is hindered by under-developed equity markets, and overall equity market capitalisation is negligent when compared to the US. The report argues that the Commission’s CMU project provides an opportunity to address identified limitations and help unlock the full potential of European capital markets. According to the article, the report is the first out of a total three; the last two reports will look into barriers that contribute to the under-development of Europe’s equity markets, as well as possible solutions to addressing these barriers.


AFME report:


Finance Watch: Capital Markets Union Q&A – 14 December

The NGO Finance Watch has published a Q&A report on the CMU, which unveils some of the potential limitations as well as the organisation’s own positions with regard to the Commission’s stated actions to foster capital markets in the EU. Of particular interest, the document notably states that for SMEs the key challenge has been a lack of demand, as opposed to lack of funding. In order to address demand-side issues, the report notably recommends policies reducing inequalities and strengthening progressive taxation. Moreover, Finance Watch is critical of Commission plans for securitisation, argues that “local traditional banks” are most important for ensuring stable funding for SMEs, and expresses concerns over non-bank lending which it believes will generate new risks.



Event reports

ICAEW: Insolvency in Europe – Tackling the key obstacles to cross-border markets – 7 December

In early-December, an insolvency-event organised by ICAEW took place in Brussels. With a particular focus on cross-border challenges, the event brought together policy-makers and a variety of stakeholders to learn of and discuss pertinent issues that generate particular challenges to European businesses from an insolvency perspective. During the event, it was re-iterated that the Commission is expected to put forward an impact assessment on insolvency during Q2 2016, with possible proposals to be anticipated for Q4 2016. An attendee representing the German Ministry of Justice stated that there is no need for further harmonisation of insolvency proceedings in the EU. The ensuing debate notably demonstrated differing views on whether the focus should be on liquidation or on rescue and reorganisation, as well as calls for a greater focus on pre-insolvency screening.



02/02/2016, Capital Markets Union: the key to unlocking financing in Europe?, Politico, 09:00-16:45, Paris.

02/02/2016, 2015 EBF Tax Conference, European Banking Federation, 09:30-17:30, Brussels.

01/03/2016, EU Prospectus Regulation – Striking a balance, QED, 14:30-16:45, Brussels.