The European Single Access Point (ESAP)
The European Commission has approved a package of measures aimed at improving companies' ability to raise money across the EU and ensuring that Europeans get the highest returns on their savings and investments. One year after launching the 2020 Capital Markets Union Action Plan, the European Commission is following through on its promises, proposing measures to strengthen European capital markets. This will aid Europe's economic recovery following the COVID-19 crisis, as well as the digital and green transformations. In addition, the Commission has issued a Communication outlining the activities it would take to stimulate the market next year.
Investors will have better access to corporate and trading data as a result of today's proposals. The measures will also encourage long-term investing and make cross-border selling of investment funds easier and safer. Overall, today's measures will improve the connection between EU enterprises and investors, increasing access to capital for businesses, expanding investment opportunities for individual investors, and further integrating EU capital markets.
The following are the legislative initiatives that were passed :
The European Single Access Point (ESAP) aims to make data more accessible to investors.
The ESAP will provide a single point of access to public financial and sustainability-related data about EU enterprises and investment products. This will increase a company's visibility in the eyes of investors, resulting in more funding options. This is especially essential for small businesses with small capital markets, since they will be more easily seen by EU, as well as foreign, investors. The ESAP will also include sustainability-related information published by businesses that will help the European Green Deal's goals. The ESAP is a cornerstone of the EU's Digital Strategy and the Digital Finance Strategy as a single data space.
The European Long-Term Investment Funds (ELTIFs) Regulation is being reviewed with the goal of increasing long-term investment, including by ordinary investors.
ELTIFs will become more appealing to investors as a result of today's assessment, as well as their position as a complementary source of funding for EU businesses. It would also make it easier for individual investors to invest in ELTIFs by reducing the €10,000 minimum investment requirement, while maintaining strong investor protection. ELTIFs are particularly suited to assisting in the financing of green and digital transformations because they are meant to channel long-term investments.
The Alternative Investment Fund Managers Directive is being reviewed (AIFMD)
The market for Alternative Investment Funds will be more efficient and integrated as a result of today's improvements. The plan harmonizes the laws governing funds that lend to businesses. This would make it easier to lend to the actual economy while also providing stronger protection for investors and safeguarding financial stability. Delegation rules are also clarified as a result of the review. Delegation laws in the EU allow fund managers to hire experts from other nations. Today's assessment will guarantee that EU regulators have enough information and are working together to protect investors and financial stability.
Enhancing transparency by providing a "European consolidated tape" for better access to trading data by all investors is one of the goals of the Markets in Financial Instruments Regulation (MiFIR) review.
The changes to EU trading rules announced today will improve capital market transparency. They plan to launch a "European consolidated tape," which will provide investors with near real-time trading data for stocks, bonds, and derivatives across all European trading venues. Until now, only a few professional investors have had access to this information. The current assessment will help to level the playing field between stock exchanges and investment banks. Furthermore, by abolishing the open access rule, it will improve the worldwide competitiveness of EU trading venues.
The Commission will follow up in 2022 with more CMU activities, including a proposal on listing, an open finance framework, a corporate insolvency initiative, and a financial literacy framework, based on the actions stated in the 2020 Capital Markets Union (CMU) Action Plan.
Members of the College expressed their views as follows:
"Europe needs robust and integrated capital markets to help the real economy and bounce back after the COVID-19 crisis," said Valdis Dombrovskis, Executive Vice-President for an Economy that Works for People. The ideas made today bring us one step closer to establishing the Capital Markets Union. This is critical for the EU's economic progress. This is accomplished by increasing access to company and trading data and directing investments toward our sustainability and digital goals. The current package focuses heavily on assisting small businesses in small capital markets, making it easier for them to discover and access various sources of funding. It will also improve the EU's international competitiveness as a trading destination."
"Capital markets, alongside banks, play a crucial role in funding our economy," said Mairead McGuinness, Commissioner for Financial Services, Financial Stability, and the Capital Markets Union, "but more progress is needed to advance towards the completion of the Capital Markets Union." Today, we're taking steps to make our capital markets more transparent, make financial and sustainability data more accessible, and make investment products like ELTIFs and other alternative investment funds more appealing to investors and fund managers. This will better serve the requirements of businesses seeking capital to expand, which is critical for the economy as well as accomplishing our green and digital goals. But we're not done yet; we're unveiling today even more ambitious CMU projects for 2022, including access to public markets for businesses, open finance, financial education, and insolvency."
Steps to take next
The European Parliament and the Council will now debate all aspects of the legislative package. We urge the co-legislators to begin working on these suggestions as soon as possible because time is of the importance.
The Capital Markets Union's (CMU) purpose is to develop a truly one European capital market. Its goal is to get investment and money flowing across all Member States, benefiting citizens, investors, and businesses regardless of where they are located inside the European Union. This is especially important given the COVID-19 crisis and the funding required to enable recovery, long-term growth, and the dual green and digital revolutions.
Deepening the CMU is a difficult process that will not be completed by a single measure. As a result, we need to make progress in all areas where capital flow is still restricted. The Commission's 2020 CMU Action Plan is being implemented, and the four legislative initiatives accepted today are a crucial step in that direction. They help the CMU achieve its basic objectives by addressing issues in a wide range of capital market services.
