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Capital Markets Union

Capital Markets Union (CMU)

From the Financial Services Action Plan launched in 1998 to the Giovannini Reports in 2001-2003, attempts to establish a fully integrated Single Market for Financial Services in Europe are not new. With the Capital Markets Union (CMU) initiative launched by the European Commission back in September 2015, an important political impetus was given to a roadmap of actions, attempting to establish a more diversified and sustainable financial ecosystem, fostering growth and resilience. 

Despite efforts in recent years, the CMU project remains work in progress and is a top priority for the von der Leyen Commission, which in 2019 set up an expert group, the High Level Forum (HLF) on the CMU, of which Deutsche Börse Group was part.

The Forum was asked to develop recommendations for future targeted CMU actions that will reduce barriers to the flow of capital, that inhibit markets from growing, ensuring equal access to capital markets across the EU. The final report “A new Vision for Europe’s capital markets”, was published in June 2020 and contains a set of 17 specific sets of actions that are considered to be “game changers” for what the EU urgently needs to implement in order to overcome the most serious barriers, and achieve fully functioning, integrated capital markets, with an overall focus on re-equitization. With its Action Plan on the CMU, published in September 2020, the European Commission has committed itself to follow-up on a majority of the recommendations of the HLF.

Other initiatives in which Deutsche Börse Group is active include the Markets4Europe initiative, a pan-European collaborative industry campaign that aims to propose game-changing solutions for the development of truly integrated EU financial markets as part of the 2019-2024 agenda.

It is high time to bring the CMU to the next level

The need to progress with creating a single market for capital markets in the EU27 has become particularly urgent with the departure of the UK, Europe’s largest financial centre. Moreover, there is an increased importance of fostering globally competitive EU27 structures in light of shifting global balances.

The outbreak of the COVID-19 pandemic and the devastating impact on the viability, growth and funding that the interruption of economic activity is expected to have for firms, and SMEs in particular, however makes progressing on CMU more important than ever.

From a Deutsche Börse Group perspective, we genuinely support actions aiming at creating an efficient and high-quality ecosystem that fosters sustainable economic growth – notably in light of a new political and economic reality at the global level and the unprecedented crisis situation under the COVID-19 pandemic.

We welcome an increased focus on re-equitization and recommendations in regard to the functioning of primary markets, for example on alleviations of listing requirements in order to make public equity financing a more attractive option for smaller companies.

It will be essential to increase access to capital markets by removing remaining barriers that further hinder market integration, e.g. fiscal disincentives to equity financing (withholding tax, insolvency procedures), but also to put the right incentives into place, e.g. creating a private public fund for IPOs as proposed by the European Commission as well as promoting the availability of SME research.

However, well-functioning secondary financial markets (for trading) are just as important as primary markets (for issuing) and constitute a necessary prerequisite to the  successful development of the CMU. The robust and transparent price formation processes of exchanges are key to attract liquidity and ensure that shares raised on primary markets can continue to be traded and attract investors in the first place. Therefore, DBG strongly believes that measures for a simplified market structure aligning requirements across trading venues and a well-calibrated transparency regime under MiFID II/MiFIR should be an integral part of completing the CMU to fully support efficient, liquid and resilient capital markets.

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