Photo: Stephane Mignon

On 28 January 2015, the Commission announced that it had started work on its “flagship project” to integrate and deepen European capital markets. A few weeks later, on 18 February, it presented its Green Paper “Building a Capital Markets Union” together with a more technical Staff Working Document that explains the thinking behind the project in greater detail. Both papers contain no surprises, but they clarify the agenda for the future as well as the thinking and discourse behind the project.

The Green Paper, in particular, identifies five priority areas for short-term action:

  • High-quality securitisation, probably the most controversial part of the project, and the prospectus regime for investment funds;
  • Standardisation of credit information about SMEs in order to make them investable for non-bank investors who traditionally have little access to such information;
  • Measures to boost long-term investment;
  • Inclusion of the European Long-term Investment Funds (ELTIF);
  • Supporting the development of a European market for privately issued corporate debt (private placement).

Furthermore, the Paper also lists a number of regulatory and legal areas in which national frameworks would have to be harmonised to create an integrated capital market (the “single rulebook”). Among them, insolvency laws, corporate governance regimes and diverging tax treatments for financial instruments. There are no concrete proposals yet, as these have to develop out of the consultation phase.

The release of the Paper initiates a phase of public consultation that will last until 13 May 2015. Alongside this consultation, two parallel discussions have been launched that focus specifically on two CMU-related areas: “simple, transparent and standardised” securitisation and the review of the Prospectus Directive.