Our work

Capital Markets Union

The IRSG Capital Markets Union workstream was charged with developing research and policy proposals in association with European Commission plans for the development of a Capital Markets Union. The IRSG has strongly supported the creation of a Single Market for Capital since the Commission first announced its intention to focus its efforts on this initiative in the summer of 2014 and has provided the evidence base in support of its CMU policy recommendations through the publication of various research reports and responses to the Commission’s consultations.

Before the UK’s vote to leave the EU, the Capital Markets Union agenda was seen as a major potential boost Europe’s economy. The IRSG wants to continue to play a pivotal role in the shaping this debate. While it is impossible to predict how the Brexit negotiations will play out, this is clearly an area where continued close cooperation would benefit the EU27 and the UK.

The CMU workstream, which was chaired by Nick Collier of Thomson Reuters, has produced various publications and consultation responses and has served as a sounding board for relevant work by other committees, including:

Seven Principles that should underpin the CMU

Response to the CMU Green Paper

Response to the CMU Action Plan

Response to the Call for Evidence

Response to the Retail Green Paper

Response to the Insolvency Consultation

 

Composition of the workstream:

The workstream included representatives from financial services firms, trade associations, the legal profession and data providers. The workstream included representative from:

  • AFME
  • Allen & Overy LLP
  • Allianz Global Investors
  • Aviva
  • Barclays
  • BDO LLP
  • BBA
  • Citi
  • City of London Corporation
  • Clifford Chance
  • David Green Consulting
  • Deloitte
  • Deutsche Bank
  • DLA Piper
  • Fidelity
  • GE Capital
  • Goldman Sachs
  • HSBC
  • JP Morgan
  • KPMG
  • LSE
  • Morgan Stanley
  • Standard Charter
  • Stanmdard Life
  • Thomson Reuters

For further details about the work of this group, please contact the IRSG Secretariat lead, Philip Jones.

To enable security for families through sustainable pension systems and diverse portfolios of investment that appropriately balance risk and reward; and
To deliver infrastructure that can support growth and leave a sustainable legacy for future generations.
The response also highlighted five key priorities that the IRSG believes to be the most important for the Commission to deliver a Single Market in capital that benefits the whole of the EU. These priorities include:
In the implementation and review of post crisis regulatory reform, calibrating prudential requirements so they appropriately reflect risk, sensitively balance the growth imperative and avoid unintended interactions and consequences;
Encouraging Member States to undertake structural economic reforms, eliminating protectionist practices, promoting convergence in supervisory approaches and instituting a policy framework conducive to investment;
Sharing best practices about how to make information about SMEs more easily accessible and widely available, and reducing regulatory burdens associated with non-bank finance for SMEs;
Reviewing how well-served retail investors are across the range of investment products and whether more can be done to ensure that the policy framework does not unduly limit choice and channels of distribution;
Enabling investment flows in and out of Europe by facilitating international regulatory convergence.
The full consultation response can be found here

The group also responded positively to the Green Paper consultation that was launched by the Commission in February of this year and which closed in May. In summary, the IRSG consultation response set out three ambitions central to CMU:

 

  • To promote prosperity in Europe by financing innovative, internationally competitive firms.
  • To enable security for families through sustainable pension systems and diverse portfolios of investment that appropriately balance risk and reward.
  • To deliver infrastructure that can support growth and leave a sustainable legacy for future generations.
The response also highlighted five key priorities that the IRSG believes to be the most important for the Commission to deliver a Single Market in capital that benefits the whole of the EU, namely:
  • In the implementation and review of post crisis regulatory reform, calibrating prudential requirements so they appropriately reflect risk, sensitively balance the growth imperative and avoid unintended interactions and consequences.
  • Encouraging Member States to undertake structural economic reforms, eliminating protectionist practices, promoting convergence in supervisory approaches and instituting a policy framework conducive to investment.
  • Sharing best practices about how to make information about SMEs more easily accessible and widely available, and reducing regulatory burdens associated with non-bank finance for SMEs.
  • Reviewing how well-served retail investors are across the range of investment products and whether more can be done to ensure that the policy framework does not unduly limit choice and channels of distribution.
  • Enabling investment flows in and out of Europe by facilitating international regulatory convergence.
The full consultation response can be found here.
The IRSG also produced a response to the CMU Action Plan (published on 30 September 2015) which draws on the IRSG response to the Green Paper on CMU and the policy priorities identified by members. The letter comments on:
  • Recalibration of Solvency II Capital Requirements
  • Revision of the Prospectus Directive
  • Third country access
  • Cumulative impact of regulation
  • Insolvency
  • Enforcement of EU legislation

Background
Over recent years, EU policymakers have expressed the desire for capital markets to comprise a more substantial role as a provider of finance within the European financial system. Post-crisis deleveraging and the shift towards more stringent capital requirements have contributed to constraints on the availability of finance, particularly for SMEs. Market finance solutions such as private placement and securitisation have been mooted as alternatives to traditional bank lending for certain customers and purposes. Furthermore, the capital markets channel of financial intermediation is regarded as means of mitigating the economic impact of shocks to the banking system.

European Commission President Juncker has tasked Lord Hill with the development of a Capital Markets Union in Europe. A consultation is expected from DG FISMA in early 2015 and a Commission roadmap for Capital Markets Union is expected in Q3 2015.

Composition of the group

Organisations represented on the Steering Committee include:

  • Aberdeen Asset Management
  • AFME
  • Blackrock
  • Bourse Consult
  • BBA
  • BVCA
  • Citigroup
  • Clifford Chance
  • CBI
  • DLA Piper
  • EY
  • Fidelity Worldwide Investment
  • Goldman Sachs
  • HSBC
  • ICMA
  • KPMG
  • Lloyds Banking Group
  • London Stock Exchange
  • Prudential
  • PwC
  • The Investment Association
  • Thomson Reuters
  • WMA

Organisations represented on the working group include:

  • Allen & Overy
  • Allianz Global Investors
  • Aviva
  • Barclays
  • BDO
  • Citigroup
  • Clifford Chance
  • Deloitte
  • Deutsche Bank
  • GE Capital
  • HSBC
  • J.P. Morgan
  • Legal & General
  • Mayer Brown International
  • Morgan Stanley
  • Standard Chartered
  • Standard Life
  • Thomson Reuters