MSP Supporting the Commission’s View

Market Structure Partners provided the financial markets expertise for the European Commission’s study in understanding the full impact of commercial business information services on listed SMEs. This report contributed to the thinking behind the Commission’s plan for the CMU.

Read more: Improving the Market Performance of Business Information Services Regarding Listed SMEs – July 2014.

Capital Markets Union (CMU) is the flagship project of an overarching investment plan that will involve a series of projects to improve growth and investment in the EU. Elements of the CMU may result in legislation at a European level.

In November 2014 the newly appointed European Commission announced its Investment Plan for Europe to address the decline in investment in Europe since before the 2008 recession. The European Commission seeks to foster “economic recovery, job creation, long-term growth and competitiveness” through the €315 billion Investment Plan, which is as such, a ‘Commission Priority’.

The CMU project is proposing to integrate the 28 EU Member States’ markets into a single market beyond what has been created by existing legislation. It recognises that there have been issues with historical preferences for financing, pension provision, how regulation is applied, corporate governance and company law. Its aim is to improve the growth and diversity of investment in Europe’s businesses by improving access to finance. It is hoped that this will create economic growth and increased jobs by removing barriers to cross-border investments for all businesses around Europe.

This is a long-term project in its infancy; the CMU is only likely to be fully established (through various works) in 2019. On 30th September 2015, the European Commission launched the CMU Action Plan; a programme of 6 objectives divided into 33 measures. In 2017, the Commission is actively seeking to accelerate the CMU’s progress on bringing in reform, especially in anticipation of Brexit.

Key proposals:

  • Encourage high-quality securitisation – which is transparent, simple and safe, thus also freeing up bank balance sheets to lend.
  • Review the Prospectus Directive to make it easier for firms to access markets and reach investors across borders.
  • Build a Europe-wide SME database to help get loans to smaller firms by providing better information to investors.
  • Encourage the take-up of new European long-term investment funds to channel investment in infrastructure and other long-term projects.
  • Regulation to be introduced to create a two types of funds:
    1. A European Fund for Strategic Investments (EFSI) where at least EUR 315 billion would be mobilized and managed by the European Commission and European Investment Bank (EIB) targeted at initiatives that meet the needs of the real economy and,
    2. European Long Term Investments Funds designed to attract all types of investors who want to put their money towards long-term investments aimed to boost financing available to companies in search for long-term capital for projects relating to energy, transport but also social housing, schools and hospitals. These may be illiquid assets which will have controlled timing for buying and selling.

Capital Markets Union Timeline

Skip to: 201420152016201720182019

July 2019
21st July
The Prospectus Regulation shall now apply, and all Member States must transpose the Regulation into national laws by this date. The Regulation was published in the Official Journal of the EU in March 2019.
April 2019
18th April
European Parliament formally adopts several of the European Commission’s legislative proposals. They concern:

  • Collective Investment Funds
  • European Supervisory Authorities (ESAs) review
  • Investment firms review
  • Covered bonds
  • SME growth markets
  • Disclosure requirements on sustainable investments
  • EMIR 2.2

Refer to our EMIR timeline for more on the last two items.

March 2019
21st March
European Parliament and Member States agree to European Commission’s proposal to strengthen the supervisory role and powers of the European Supervisory Agencies (ESAs), with an emphasis on anti-money laundering and financial crime. Technical work is now required in order to complete Level 2 of the legislation.
14th March
The Prospectus Regulation is published in the Official Journal of the EU, and shall apply from 21st July 2019.
13th March
The European Parliament and Member States agree to the European Commission’s proposal for more robust supervision of central counterparties in and out of the EU. This proposal will further develop the forthcoming EMIR revision, whilst anticipating the impact of Brexit whereby “a significant volume of financial instruments denominated in the currencies of Member States will be cleared by CCPs in non-EU countries.”
February 2019
26th February
European Commission’s proposed rules to promote EU covered bonds are adopted by the European Parliament and Member States. Further technical work is required before the legislation can be voted on and adopted. Covered bonds are “financial instruments issued by banks to fund the economy”, and are a key piece of the CMU.

Agreement is also reached on the Commission’s proposal for “more proportionate and effective prudential rules for investment firms (IFR)”.

13th February
The Council of the EU’s permanent representatives (COREPER) agreed to the Commission’s proposal for a regulation on a pan-European personal pension product (PEPP). The Regulation moves to the European Parliament and Council of the EU for formal adoption.
5th February
The European Parliament and Member States approve the European Commission’s proposal for reforming EMIR.
December 2018
13th December
European Commission adopts the delegated regulation to promote the use of SME growth markets through bringing technical adjustments to MiFID II, that was first proposed in May 2018.
November 2018
28th November
Commission publishes a Communication calling for the completion of the CMU before the May 2019 European Parliament elections.
September 2018
3rd September
The revised Shareholder Rights Directive (SRD II) is published in the Official Journal of the EU and enters into force 20 days later, and apply from 3rd September 2020. It aims to rectify gaps in previous 2007 legislation that were exposed by the 2008 financial crisis, and deals particularly with shareholder visibility of companies they have invested in, patterns of excessive short-term risk-taking, excessive (and unjustified) remuneration and the costs of exercising shareholders’ rights.
July 2018
21st July
A provision of the Prospectus Regulation due to enter into force, whereby the Regulation will not apply to public offerings of securities where the total consideration across the EU, calculated over a 12-month period, is less than 1 million euros.
May 2018
24th May
European Commission publishes a legislative proposal on sustainable finance.

European Commission also adopts proposal to promote SME growth markets, which includes:

  • a proposal for a regulation amending the market abuse regulation and the prospectus regulation
  • a delegated regulation bringing technical adjustments to MiFID II
April 2018
24th April
European Commission publishes the results of its “study on the distribution systems of retail investment products”.
10th April
The European Commission and European Investment Fund launch VentureEU: a Pan-European Venture Capital Funds-of-Funds Programme. VentureEU aims “to boost investment in innovative start-up and scale-up companies across Europe” by providing access to capital through funding 6 participating investment funds with €410 million.
March 2018
8th – 14th March
European Commission:

European Commission due to deliver a legislative proposal for an EU-framework for covered bonds, envisioned as “a key long-term funding tool to help banks finance their lending activity”.

The Commission proposes legislation for a regulation “on the law applicable to the third-party effects of assignments of claims”.

The Commission is also delivers a Communication “on the applicable law to the proprietary effects of transactions in securities”
January 2018
31st January
European Commission publishes Final report of the High-Level Expert Group on Sustainable Finance (HLEG). This report completes work that began in October 2016, investigating the CMU’s aim to support sustainable investment and pave a “way towards a financial sector that supports a more sustainable and inclusive economic system, in line with the EU’s environmental and social objectives.”
12th December
The Securitisation Regulation is published in the Official Journal of the EU, alongside a respective amendment to the CRR Regulation. They enter into force 20 days after publication, and will apply from 1st January 2019.
October 2017
20th July
Revised EuVECA (venture capital) and EuSEF (social entrepreneurship funds) legislation is published in the Official Journal of the EU, as per previous discussions to improve access to finance for small and growing businesses and social enterprises. (The original legislation entered into force in July 2013.)
July 2017
20th July
The Prospectus Regulation’s obligation to publish a prospectus “shall not apply to the admission to trading on a regulated market” for securities deemed equal and fungible with securities already admitted to trading on the same regulated market, up to a 20% limit of all securities on that market over a 12 month period. There are also provisions for the conversion or exchange of securities.
June 2017
30th June
The Prospectus Regulation as adopted on 14th June is published in the Official Journal of the EU, entering into force 20 days later on 20th July.
29th June
The European Commission launches proposal to “provide pension providers with the tools to offer a simple and innovative pan-European personal pension product (PEPP)”.
8th June
European Commission publishes mid-term review of the CMU Action Plan. The scope of the mid-term review is to ensure that the plan is still “fit for purpose” since its inception and to add newly required actions.
May 2017
30th May
European Parliament and Council of the EU reach an agreement in principle on Simple, Transparent and Standardised (STS) securitisation.

European Parliament and Council of the EU also reach an agreement in principle on the European Venture Capital Funds (EuVECA) Regulation and the European Social Entrepreneurship Funds (EuSEF).

17th May
First reading of theproposed regulation on the “establishment of the Structural Reform Support Programme for the period 2017 to 2020” is passed by the Parliament and the Council. It is published in the Official Journal of the EU on 19th May and enters into force the following day.
4th May
European Commission publishes a proposal to review and amend the EMIR regulation with respect to meeting the aims of the Capital Markets Union.
March 2017
23rd March
European Commission publishes its “Consumer Financial Services Action Plan“; addressing the provision of and access to retail financial services to the public following the Green Paper of December 2015.
February 2017
15th February
The Permanent Representatives Committee (COREPER) of the Council Trialogue endorses the final compromise text for a regulation on the Structural Reform Support Programme (SRSP). The proposal is still subject to a plenary vote at Parliament, expected in April.
8th-10th February
Trialogue held on 8th February which resulted in political agreement on the Commission’s proposal for a regulation on the Structural Reform Support Programme (SRSP) between the European Parliament and Council of the EU with a final compromise text, published on 10th February.

First proposed in November 2015, the SRSP provides financing for any Member State to design and implement institutional, administrative and structural reforms with technical support from the Commission. The reforms could be in areas including taxation, justice systems, financial corruption and the labour market.

The proposal is still subject to further technical talks, endorsement by the Permanent Representatives Committee (COREPER) of the Council and a plenary vote at Parliament.

January 2017
20th January
European Commission launches public consultation for input into the mid-term CMU review scheduled for publication in June 2017. This will help influence work going forward as the Commission looks to increase the pace of the CMU’s work. The consultation closes on 17th March.
Report on national barriers to the free movement of capital communication to be adopted by the end of the year.
The European Commission is due to launch a study on the “Distribution systems of retail investment products across the EU”.
December 2016
20th December
The Council of the EU’s Permanent Representatives Committee agrees a draft regulation with the European Parliament on 20th December on prospectuses for the issuing and offering of securities. The text will be submitted to Parliament and Council for formal adoption. Key points agreed include:

  • projects requiring raising or crowdfunding up to €1 million will not require a prospectus
  • prospectuses will be mandatory for capital raising over €8 million
  • creation of a new EU growth prospectus, available for SMEs, small mid-caps in SME growth markets and small unlisted companies
  • introduction of frequent issuer regime, to reduce approval times in half to 5 days for frequent participants in capital markets
November 2016
22nd November
European Parliament adopts the European Commission’s Green Paper on Retail Financial Services. An Action Plan from the Commission is expected to follow. The European Commission also proposed a Directive proposing “more efficient insolvency and restructuring procedures”.
16th November
ESMA publishes response to European Commission’s consultation on proposed EU personal pension framework.
The European Parliament’s ECON Committee agreed compromise amendments for the European Commission’s proposal for a new STS (Simple, Transparent and Standardised) securitisation regulatory framework in November 2016. The next step is for the Parliament, Council and Commission to work to reach agreement in trilogue.
October 2016
25th October
The European Commission publishes a corporate reform package of three proposals:

  1. Common Consolidated Corporate Tax Base (CCCTB): this proposal for a Council Directive proposes a single system for calculating taxable profits for businesses operating across different EU jurisdictions. This follows a public consultation that closed in January 2016. The proposal states a date of entry into force of 1st January 2019. The Council has 2 months to consider the proposal.
  2. Double Tax Dispute Resolution Mechanisms: this proposal for a Council Directive proposes rules for Member States to eliminate double taxation which is a barrier to cross-border investment through mutual agreement or independent dispute resolution. It is proposed that Member States are expected to transpose the directive by 31st December 2017.
  3. Hybrid Mismatches with Third countries: Amending the 2016 Anti-Tax Avoidance Directive, this proposal seeks to eliminate the use of hybrid mismatch arrangements involving third countries which “exploit differences in the tax treatment of an entity or instrument under the laws of two or more tax jurisdictions to achieve double non-taxation”. It states a date of entry into force of 1st January 2019. The Council has 2 months to consider the proposal.
September 2016
14th September
European Commission issues a Communication to draw on progress made and the next steps to be taken to ensure implementation is on course for the target date of 2019.
August 2016
1st August
European Commission opens a consultation to review the EU macro-prudential framework. The consultation closes on 24th October.
July 2016
14th July
Following consultation (September 2015 – January 2016), the European Commission proposes revisions for EuVECA (Venture Capital Funds) and EuSEF (European Social Entrepreneurship Funds) legislations to “boost the take-up of these investment funds”. The European Parliament and Council of the EU now must consider whether to adopt the proposal.
June 2016
30th June
The Netherlands Presidency ends having made significant progress on its key aims of completing 2 regulations on securitisations before the end of its term.
8th June
The Council of the EU gives support to European Commission’s proposal to simplify the prospectus regime, adopted in September 2015.
May 2016
The European Commission publishes a report on the EU’s crowdfunding sector as part of promoting innovative ways of connecting savings to the growth of the economy and funding businesses. The report finds that whilst the sector is growing rapidly, it is still small and largely local so there is no requirement for a European framework at this stage. The European Commission will continue to meet twice a year with sector regulators and firms.
April 2016
25th April

European Commission publishes the CMU’s First Status Report.
21st April
ESMA publishes its response dated 21st April, to the European Commission’s Green Paper on Retail Financial Services of December 2015.
1st April

European Commission’s amendment to a Solvency II delegated act is published in the Official Journal of the European Union and enters into force on the 2nd April. It has updated the regulation to reduce the cost and barriers for insurers to invest in certain infrastructure projects and European long-term investment funds (ELTIFs). This is a key measure for the Investment Plan for Europe which aims to mobilise private sector investment.
March 2016
23rd March
European Commission opens a consultation on EU business restructuring and insolvency framework. The consultation closes on 14th June.
16th March
European Parliament’s ECON Committee publishes its draft report on the Commission’s proposal to simplify the prospectus regime. The Council of the EU is expected to announce its general approach in Q3 2016.
December 2015
10th December
European Commission publishes a Green Paper for public comment on the European market for retail financial services (insurance, loans, payments, current and savings accounts and other retail investments). The paper primarily asks how to open up the market for “better results for consumers and firms, whilst maintaining an adequate level of consumer and investor protection”. This paper complements not just the CMU but also the Digital Single Market (DSM) and Single Market Strategy (SMS). Following the consultation, an Action Plan on Retail Financial Services is anticipated in Q3 2016.
2nd December
Council of the EU’s Permanent Representatives Committee (COREPER) agrees its position on proposals to develop a securitisation market in Europe on behalf of the Council. The European Parliament is due to vote on this in November 2016.
November 2015
30th November

European Commission proposes to simplify the prospectus regime, making it simpler and cheaper for firms to issue them, and easier for investors to access and understand them. The European Parliament and the Council of the EU now must discuss before deciding whether to adopt the proposal.
September 2015
30th September
European Commission launches the Capital Markets Union Action Plan and announces the following initiatives:

  • Securitisation Initiative: This is a package of two parts. 1) The European Commission proposes a new Securitisation Regulation to establish a new framework that “helps to better differentiate simple, transparent and standardised products” (STS securitisation). 2) The European Commission also proposes to amend the Capital Requirements Regulation.
  • Investment in Infrastructure: The European Commission has made changes to the Solvency II Commission Delegated Regulation, which will apply from 1st January 2016. These changes are to encourage insurance companies to use their vast capital resources to invest long-term in infrastructure projects.
  • Prospectus Directive: the European Commission will propose changes later in 2015.
  • Venture Capital Funds and European Social Entrepreneurship Funds: The European Commission opens a consultation to review the EuVECA and EuSEF regulations. The consultation is open from 30th September to 6th January 2016.
  • Covered Bonds: The European Commission opens a consultation on the impact of the financial crisis on national covered bond markets and the potential for an integrated European covered bond framework. The consultation is open from 30th September to 6th January 2016.
  • EU Regulatory Framework: The European Commission calls for evidence to understand the combined impact of all the regulatory legislation that affects the EU financial markets. The consultation is open from 30th September to 6th January 2016.
July 2015
9th July
European Parliament voted in support of the CMU at Plenary in a non-binding resolution.
June 2015
19th June
Economic and Financial Affairs Council (ECOFIN) of the Council of the EU agrees to support the European Commission’s plan to develop for a CMU.
8th June
European Commission holds a public hearing on the “Next steps to build a Capital Markets Union”.
May 2015
EU legislators successful conclude negotiations for the Regulation of a European Fund for Strategic Investments (EFSI) which means that the Fund will become operational and start financing projects by end of Summer 2015. The Fund is to be jointly managed between the Commission and the European Investment Bank (EIB).
21st May
ESMA publishes a supportive response to the European Commission’s Green Paper and highlights how its work will contribute to the CMU. ESMA also responds to the Commission’s other two open consultations on securitisation and the Prospectus Directive.
13th May
The European Commission’s public consultation and two related consultations on high quality securitisation and the review of the Prospectus Directive all close.
March 2015
European Parliament gives support for the new investment framework for ELTIFs.
February 2015
18th February
European Commission launches a public consultation with the Green Paper.
January 2015
The European Commission adopted the legislative proposal for the European Fund for Strategic Investments (EFSI).
28th January
European Commission launches a project to create the CMU with a first orientation debate at the College of Commissioners.
November 2014
European Commission adopts the Investment Plan of which the Capital Markets Union is a part.

Sourced from European Parliament and European websites, financial and national newspapers and market practitioners.

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