DOCSLIB.ORG

An Agenda for Capital Markets Union November 2014

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
An Agenda for Capital Markets Union November 2014 An agenda for capital markets union November 2014 Association for Financial Markets in Europe www.afme.eu About AFME The Association for Financial Markets in Europe (AFME) is the voice of Europe’s wholesale financial markets. We represent the leading global and European banks and other significant capital market players. We believe that liquid capital markets and a well-functioning banking system are central to any successful modern economy. We advocate stable, competitive, sustainable European financial markets Focusthat support economic growth and benefit society. Expertiseon a wide range of market, business and prudential issues Strongdeep policy and technicalrelationships skills Breadthwith European and global policymakers Pan-Europeanbroad global and European membership organisation and perspective Global reach via the Global Financial Markets Association (GFMA) Capital Markets Union An agenda for capital markets union Contents FOREWORD ........................................................................................................................................ 2 1. EXECUTIVE SUMMARY ............................................................................................................ 3 2. GOALS FOR A CAPITAL MARKETS UNION ........................................................................ 5 Defining the capital markets union ...................................................................................................................... 5 The international dimension to capital markets union ............................................................................... 8 Building CMU through a better regulation approach ................................................................................... 8 3. THREE PILLARS OF CAPITAL MARKETS UNION ......................................................... 10 More efficient and liquid markets for issuance of financial instruments ........................................... 10 Harnessing long-term savings to promote investment ............................................................................. 13 Open, integrated capital markets infrastructure .......................................................................................... 16 4. INSTITUTIONAL FRAMEWORK FOR CAPITAL MARKETS UNION .......................... 19 CMU and the Single Market ................................................................................................................................... 19 CMU and banking union .......................................................................................................................................... 19 Supervisory convergence and the role of ESMA ........................................................................................... 19 ANNEX 1. OVERVIEW OF INITIAL AFME PROPOSALS TO PROMOTE CMU ................. 21 ANNEX 2. COMPARATIVE DATA ON EU AND U.S. CAPITAL MARKETS ......................... 22 ANNEX 3. OVERVIEW OF EU LEGISLATIVE BASE FOR THE CAPITAL MARKETS ...... 25 Page 1 Capital Markets Union FOREWORD For Europe, capital markets union is the right project at the right time. We are delighted that European Commission President Juncker has identified CMU as a flagship initiative for his five-year mandate. We also welcome the inclusion of the project in the brief of Commissioner Hill as part of the wider financial services portfolio. The EU is facing a growth crisis: output is flat, unemployment remains high and investment is falling. What Europe needs is a new growth model to put underemployed resources – labour, capital and entrepreneurship – to work, to generate jobs and growth for citizens across the continent. The financial sector can and must play a central role in this economic revitalisation, through a successful capital markets union. But clearly we will need a growing economy to gain the full benefits of CMU. Strictly, CMU is not a new project. A single EU financial market was already a goal of policy prior to the Single European Act. To this end, much has been tried in Europe, much has been achieved, but more remains still to do. Policymakers should think about CMU as at least a 5 year project, and they should identify clear economic goals that they want it to achieve. In this paper we propose just such a set of firm, measurable targets – most notably, to increase the capital markets’ share of debt financing by at least 10 percentage points over the next 5 years. In defining its ambition, we ask the Commission to consider the goals we have proposed for CMU. For each individual action that is proposed under capital markets union, we must ask: will it promote investment and growth? There is already a long list of potential policy options for CMU and it will be crucial to make the right choices based on good evidence – in order to develop a targeted, strategic agenda of high impact interventions. We would encourage the Commission to take the necessary time to build the evidence base and refine the policy agenda. AFME and its members will offer all the support we can, and we will also examine where industry itself can deliver positive change. Europe’s financial sector is still rebuilding after the crisis. Furthermore, while regulatory reform has made the financial system much safer, it has also reduced the capacity to fund growth, both through banks and the capital markets. Advancing CMU in this environment will not be easy, but it is achievable. However, Europe should not have to also contend with a new financial transaction tax and further banking structure reform – both of which would fragment markets and reduce liquidity. We call on the Commission to demonstrate an unequivocal commitment to capital markets union and to jobs and growth by reassessing its position on both files and taking the FTT in particular off the table. Over the next five years AFME is committed to helping Europe’s policymakers achieve a capital markets union. If we can forge a strong, positive partnership to deliver CMU then the rewards for Europe will be substantial: deeper, more diverse capital markets; a more stable financial system; and above all, new businesses, new investment and new jobs. Capital markets union is an exciting opportunity which we must seize. Simon Lewis Chief Executive, Association for Financial Markets in Europe 2 Page 2 Capital Markets Union 1. EXECUTIVE SUMMARY As the voice of Europe’s wholesale financial markets, AFME is committed to supporting the Commission’s initiative on building a capital markets union. The CMU process should examine legislative and regulatory issues, market impediments and business practices in the EU28 in order to identify the key steps towards an open, efficient framework for all types and sizes of corporate issuers and investors. We propose that the work programme for CMU is organised under three pillars, covering: • issuance of capital market instruments (the supply side); • long-term investment in the capital markets (the demand side); and • infrastructure for capital markets issuance and trading. Economic ambitions for a capital markets union In comparing the current state of development of European and U.S. capital markets, we must acknowledge some essential structural differences in Europe – notably the diversity of currency, economic policies, tax rules, language and regulatory structures. Based on the current stage of development of EU capital markets we consider that a realistic aim for the five-year horizon of the CMU initiative would be to increase the overall share of debt financing from the capital markets in Europe by 10 percentage points, from 25% of the total to at least 35%. In pursuing such a target the Commission should consider the case for setting objectives for expanding specific product markets over the next five years; for example: • increasing Europe’s stock market capitalisation from around 75% of GDP currently to 100% of GDP, as the Federation of European Securities Exchanges has suggested; • at least doubling European issuance volumes of securitisation and private placement by encouraging greater participation by both bank and non-bank investors; and • increasing the share of capital market funding of SMEs, through both equity and debt. There is a critical link between primary and secondary markets, as the efficiency and depth of secondary markets have a direct influence on capital allocation in the economy and the cost of funding for companies and governments. The participation of market makers is critical to supporting liquidity and the overall functioning of secondary markets. Three pillars of capital markets union We propose three complementary objectives for the CMU initiative which, taken together, should provide a comprehensive framework for action: 1. Developing more efficient and liquid markets for issuance of financial instruments A range of reforms should be pursued to promote the issuance of capital markets instruments, particularly by SMEs and midcap firms, in order to expand the capital markets and increase the choice for issuers and investors. Industry initiatives on high quality securitisation and private placement should be complemented by review of applicable regulation, especially capital requirements, as well as the Prospectus and Takeover Directives; and by review of the tax regime for SME equity, in order to promote greater equity issuance by European firms. 2. Harnessing long-term savings to promote investment CMU should improve the incentives for both institutional and retail investors to make long-term investments
Load more

Recommended publications
  • European Stability Mechanism
    ~FACTSHEET~ European Stability Mechanism The Treaty establishing the European Stability Mechanism (ESM) has been ratified by all 17 euro area member states. It entered into force on 27 September 2012, nine months earlier than initially foreseen 1. The treaty was signed by euro area member states on 2 February 2012. The ESM board of governors held its inaugural meeting on 8 October 2012. The ESM is an intergovernmental institution based in Luxembourg, set up to provide financial assistance to eurozone member states experiencing, or being threatened by, severe financing problems, if this is indispensable for safeguarding financial stability in the euro area as a whole. The initial maximum lending capacity of the ESM is set at €500 billion. This is achieved with subscribed capital of €700 billion (€ 80 billion paid-in capital, the rest callable). A first version of the treaty was signed on 11 July 2011, but it was subsequently modified to incorporate decisions taken by the heads of state and government of the euro area on 21 July and 9 December 2011 to improve the effectiveness of the mechanism. As a permanent mechanism, the ESM will take over the tasks currently fulfilled by the European Financial Stability Facility (EFSF) and the European Financial Stabilisation Mechanism (EFSM). With the accelerated entry into force, the ESM will now operate alongside the EFSF for nine months. In March 2012, the Eurogroup agreed to raise the overall ceiling for ESM/EFSF lending to €700 billion 2. Already during the transitional period, until mid-2013, the ESM will be the main instrument for the financing of new programmes.
    [Show full text]
  • Should Poland Join the Euro? an Economic and Political Analysis
    Should Poland Join the Euro? An Economic and Political Analysis Should Poland Join the Euro? An Economic and Political Analysis Graduate Policy Workshop February 2016 Michael Carlson Conor Carroll Iris Chan Geoff Cooper Vanessa Lehner Kelsey Montgomery Duc Tran Table of Contents Acknowledgements ................................................................................................................................ i About the WWS Graduate Policy Workshop ........................................................................................ ii Executive Summary .............................................................................................................................. 1 1 Introduction ................................................................................................................................. 2 2 The Evolution of Polish Thought on Euro Adoption ................................................................. 5 2.1 Pre-EU membership reforms ...................................................................................................................... 5 2.2 After EU Accession ....................................................................................................................................... 5 2.3 Crisis years ...................................................................................................................................................... 6 2.4 Post-crisis assessment ..................................................................................................................................
    [Show full text]
  • Nowcasting Eurozone Industrial Production
    2003 EDITION Nowcasting Eurozone Industrial Production THEME 1 General EUROPEAN statistics COMMISSION 1 Europe Direct is a service to help you find answers to your questions about the European Union New freephone number: 00 800 6 7 8 9 10 11 A great deal of additional information on the European Union is available on the Internet. It can be accessed through the Europa server (http://europa.eu.int). Luxembourg: Office for Official Publications of the European Communities, 2003 ISBN 92-894-3416-3 ISSN 1725-4825 © European Communities, 2003 Nowcasting Eurozone Industrial Production Dominique Ladiray and Dermot O’Brien Abstract The aim of this paper is to develop a methodology for the estima- tion of nowcasts of the Eurozone Industrial Production Index (IPI) for a delay of less than 45 days. We propose to build well-specified robust models for annual and monthly eurozone IPI growth rates that incor- porate information from business surveys and partial information from Member States. We prioritise models that are stable and well-specified and the optimal models are determined on the basis of an assessment of nowcasting performance for real-time data. 1 TABLE OF CONTENTS 1. Introduction................................................................................................ 3 2. Evolution of Arrival Delays ....................................................................... 3 3. Prospects for an Early IPI .......................................................................... 5 4. Developing a Methodology for Producing IPI Nowcasts .......................... 6 5. Models for Eurozone IPI............................................................................ 7 5.1 Annual IPI Growth Rates .................................................................... 7 5.1.1 Model A: NAIVE Model ........................................................... 7 5.1.2 Model B: GETS with Business Surveys.................................... 8 5.1.3 Model C: GETS with Business Surveys and Partial Information (1) ..............................................................
    [Show full text]
  • The European Union: Questions and Answers
    The European Union: Questions and Answers Updated October 27, 2020 Congressional Research Service https://crsreports.congress.gov RS21372 SUMMARY RS21372 The European Union: Questions and Answers October 27, 2020 The European Union (EU) is a political and economic partnership that represents a unique form of cooperation among sovereign countries. The EU is the latest stage in a process of integration Kristin Archick begun after World War II, initially by six Western European countries, to foster interdependence Specialist in European and make another war in Europe unthinkable. The EU currently consists of 27 member states, Affairs including most of the countries of Central and Eastern Europe, and has helped to promote peace, stability, and economic prosperity throughout the European continent. How the EU Works The EU has been built through a series of binding treaties. Over the years, EU member states have sought to harmonize laws and adopt common policies on an increasing number of economic, social, and political issues. EU member states share a customs union; a single market in which capital, goods, services, and people move freely; a common trade policy; and a common agricultural policy. Nineteen EU member states use a common currency (the euro), and 22 member states participate in the Schengen area of free movement in which internal border controls have been eliminated. In addition, the EU has been developing a Common Foreign and Security Policy (CFSP), which includes a Common Security and Defense Policy (CSDP), and pursuing cooperation in the area of Justice and Home Affairs (JHA) to forge common internal security measures. Member states work together through several EU institutions to set policy and to promote their collective interests.
    [Show full text]
  • Decision in Strategic Inquiry OI/1/2019/MIG Concerning the Transparency of the Bodies Involved in Preparing Eurogroup Meetings
    European Ombudsman Decision in strategic inquiry OI/1/2019/MIG concerning the transparency of the bodies involved in preparing Eurogroup meetings Decision Case OI/1/2019/MIG - Opened on 13/05/2019 - Decision on 03/12/2019 - Institutions concerned Council of the European Union | European Commission ( No further inquiries justified ) | This strategic inquiry concerned the transparency of the three preparatory bodies that are involved in preparing Eurogroup meetings. The focus of the inquiry was on requests for public access to documents concerning the work of the Eurogroup and these preparatory bodies, which the Council of the European Union and the European Commission have received since the Eurogroup took proactive transparency measures in 2016. The Ombudsman found that both the Council and the Commission had dealt properly with the relevant public access requests. She further noted that, in the meantime, the Eurogroup had taken steps to improve its transparency policy. This includes the plan to create an online repository of publicly available Eurogroup documents and to provide more information about citizens’ right to request documents held by the Council. Further steps have been taken to enhance the transparency of the EWG. In view of these improvements, the Ombudsman now closes this strategic inquiry. Background to the complaint 1. The Eurogroup is an informal body in which the Finance Ministers of EU Member States that are part of the euro area (the ‘Eurozone’) meet to discuss matters relating to Eurozone economic policy. This includes matters such as post-programme surveillance of Eurozone countries that have received financial assistance or Member States’ draft budgetary plans.
    [Show full text]
  • Is a Multi-Speed Europe Really the Answer to the EU’S Problems? Published on 09
    Careful What You Choose For: Is a Multi-Speed Europe Really the Answer to the EU’s Problems? Published on 09. March 2017 by Dr Eleni Panagiotarea It appears that the EU’s solution to its current directionless and delegitimised state is a multi-speed Europe. It is ironic that the 27-nation bloc prepares to mark 60 years since its founding treaty by accepting that an ‘ever closer union’ is officially no longer on the table. Some will argue that the big four which have been backing this idea, France, Germany, Italy and Spain, are trying to cut their losses short rather than admit failure, which makes embracing divergence, whitewashing growing inequalities within and between states and appeasing populists the optimal strategy. A multi- speed Europe is, in any case, already a reality on the ground, as both the Schengen border-free zone and the eurozone attest. The next logical step for the capable and the willing is to pool resources, generate economies of scale and create structures for a new round of common projects. Yet, there are a number of problems with regard to this proposition. First, the kind of flexibility implied in multiple speeds, has been in short supply throughout the existence of the European project. Creating pockets of deeper cooperation and enabling a well-regulated flow of ‘ins’ and ‘outs’, on the basis of clusters of interests, simply surpasses the EU’s current technical and institutional capacity. Building it up will take time – time, however, is in equally short supply, considering the pervasive sense of insecurity that Europeans feel and how this is affecting their voting patterns.
    [Show full text]
  • The European Central Bank's Independence and Its Relations with Economic Policy Makers
    Fordham International Law Journal Volume 31, Issue 6 2007 Article 3 The European Central Bank’s Independence and Its Relations with Economic Policy Makers Professor Dr. Rene´ Smits∗ ∗ Copyright c 2007 by the authors. Fordham International Law Journal is produced by The Berke- ley Electronic Press (bepress). http://ir.lawnet.fordham.edu/ilj The European Central Bank’s Independence and Its Relations with Economic Policy Makers Professor Dr. Rene´ Smits Abstract In this Essay, written for the Fifty Years of European Union (“EU”) Law Conference organized by Fordham Law School, I intend to sketch the independent position of the European Central Bank (“ECB”) in the context of economic policy making within the European Union. I will briefly describe the law and the practice in respect of independence and economic-policy making, both the internal (domestic policies) and the external aspects (international policies). The law is stated as of February 25, 2008. THE EUROPEAN CENTRAL BANK'S INDEPENDENCE AND ITS RELATIONS WITH ECONOMIC POLICY MAKERS ProfessorDr. Ren Smits* INTRODUCTION* In this Essay, written for the Fifty Years of European Union ("EU") Law Conference organized by Fordham Law School, I intend to sketch the independent position of the European Cen- tral Bank ("ECB") in the context of economic policy making within the European Union. I will briefly describe the law and the practice in respect of independence and economic-policy making, both the internal (domestic policies) and the external aspects (international policies). The law is
    [Show full text]
  • The First Twenty Years of the European Central Bank: Monetary Policy
    Working Paper Series Philipp Hartmann, Frank Smets The first twenty years of the European Central Bank: monetary policy No 2219 / December 2018 Disclaimer: This paper should not be reported as representing the views of the European Central Bank (ECB). The views expressed are those of the authors and do not necessarily reflect those of the ECB. Abstract: On 1 June 2018 the ECB celebrated its 20th anniversary. This paper provides a comprehensive view of the ECB’s monetary policy over these two decades. The first section provides a chronological account of the macroeconomic and monetary policy developments in the euro area since the adoption of the euro in 1999, going through four cyclical phases “conditioning” ECB monetary policy. We describe the monetary policy decisions from the ECB’s perspective and against the background of its evolving monetary policy strategy and framework. We also highlight a number of the key critical issues that were the subject of debate. The second section contains a partial assessment. We first analyze the achievement of the price stability mandate and developments in the ECB’s credibility. Next, we investigate the ECB’s interest rate decisions through the lens of a simple empirical interest rate reaction function. This is appropriate until the ECB hits the zero-lower bound in 2013. Finally, we present the ECB’s framework for thinking about non-standard monetary policy measures and review the evidence on their effectiveness. One of the main themes of the paper is how ECB monetary policy responded to the challenges posed by the European twin crises and the subsequent slow economic recovery, making use of its relatively wide range of instruments, defining new ones where necessary and developing the strategic underpinnings of its policy framework.
    [Show full text]
  • Information Guide Euroscepticism
    Information Guide Euroscepticism A guide to information sources on Euroscepticism, with hyperlinks to further sources of information within European Sources Online and on external websites Contents Introduction .................................................................................................. 2 Brief Historical Overview................................................................................. 2 Euro Crisis 2008 ............................................................................................ 3 European Elections 2014 ................................................................................ 5 Euroscepticism in Europe ................................................................................ 8 Eurosceptic organisations ......................................................................... 10 Eurosceptic thinktanks ............................................................................. 10 Transnational Eurosceptic parties and political groups .................................. 11 Eurocritical media ................................................................................... 12 EU Reaction ................................................................................................. 13 Information sources in the ESO database ........................................................ 14 Further information sources on the internet ..................................................... 14 Copyright © 2016 Cardiff EDC. All rights reserved. 1 Cardiff EDC is part of the University Library
    [Show full text]
  • Introductory Statement "The Role of the Eurogroup in the Economic Governance Framework"
    René Repasi European Research Centre for Scientific Coordinator Economic and Financial Governance Research Fellow euro-cefg.eu [email protected] INTRODUCTORY STATEMENT The role of the Eurogroup in the economic governance framework Joint Hearing ECON – AFCO on “Institutional Aspects of the New Rules on Economic Governance and the Role of the Eurogroup” Tuesday, 5 May 2015 Good morning, Mister Chairman Gualtieri, and dear Members of the Economic and Monetary Affairs Commit- tee as well as of the Constitutional Affairs Committee. I would like to thank you for inviting me to this public hearing on “Institutional Aspects of the New Rules on Economic Governance and the Role of the Eurogroup”. This first panel is dedicated to the “role of the Eurogroup in the economic governance framework”. THE ROLE OF THE EUROGROUP FORESEEN BY PRIMARY LAW From a purely legal perspective, there is not much to say: The role of the Eurogroup is a minor one. According to Protocol (No 14) of the Lisbon Treaty on the Eurogroup, the main task of the Eurogroup is merely “to discuss questions related to the specific responsibilities they [the ministers of Eurozone Member States] share with regard to the single currency”. The Eurogroup is an informal body. It is no Union institution. It cannot adopt legally binding decisions. This was just recently confirmed by a series of orders by the General Court dismissing applications to annul a decision of the Eurogroup concerning Cypriot banks in March 2013. The General Court clearly stated that decisions of the Eurogroup do not produce legal effects. The complete absence of the Eurogroup in the law making of the Union and its inability to adopt legally binding decisions explains why the Lisbon Treaty did not provide for a mechanism to hold the Eurogroup to account for its action.
    [Show full text]
  • Cbonds Russian Domestic Bond Market Indices
    01.10.2019 Cbonds.Ru LLC www.cbonds.info Tel: + 7 (812) 336 9721 Pirogovskaya nab., d. 21, lit. A, Saint-Petersburg, 194044, Russia CBONDS RUSSIAN DOMESTIC BOND MARKET INDICES Russian Government Russian Russian Corporate Bonds Indices Bonds Indices Municipal Bonds Indices Composite Index Composite Index IFX-Cbonds 1-3Y 3-5Y more Composite Composite Composite Composite than 5Y Index Index Index Index BBB/ruAA- BB/ruBBB B/ruB- High Yield Composite Composite Composite Index Index Index 1-3Y 3-5Y more than 5Y Cbonds Indices Calculation Methodology Cbonds Indices Calculation Methodology .......................................................................................................................... 2 Calculation Formula ............................................................................................................................................................... 3 Methodology of Index List Formation .................................................................................................................................. 6 Russian government bonds Index family ............................................................................................................................ 6 Cbonds-GBI RU .............................................................................................................................................................. 6 Cbonds-GBI RU 1-3Y ...................................................................................................................................................
    [Show full text]
  • At-The-Market Equity Offerings
    Lexis Practice Advisor® Market Trends 2019/20: At-the-Market Equity Offerings A Lexis Practice Advisor® Practice Note by Eric Johnson, Michael Blankenship, Ben Smolij, and John Niedzwiecki, Winston & Strawn LLP continued volatility of market conditions, with factors such as the continued trade war between the United States and China. History has shown that more companies conduct ATM offerings in such uncertain times. For instance, at the height of the recession in 2009, the total value of ATM Eric Johnson offerings reached approximately $18 billion (with 13 ATM Winston & Strawn LLP offerings announced), whereas in 2008 the total value of ATM offerings was $323 million (with only two ATM offerings announced). In addition to providing some comfort in times of volatility, ATM offerings have remained an attractive capital raising option due to their low-cost nature as compared to other types of equity offerings. Michael Blankenship For more information, see At-the-Market Offerings and Winston & Strawn LLP Equity Distribution Agreements for At-the-Market Offerings. Deal Structure and Process In order to conduct a successful ATM offering, issuers must comply with the filing requirements of the Securities and Exchange Commission (SEC). Issuers must have filed Ben Smolij with the SEC a shelf registration statement on Form S-3. Winston & Strawn LLP This is a prerequisite before an issuer can proceed with an ATM offering. The issuer can either use a preexisting shelf registration statement or a newly filed shelf registration statement. Most companies utilize a preexisting shelf registration statement. This emphasizes one of the advantages of ATM offerings, which is the short time in which an issuer can create an ATM program.
    [Show full text]