The European Securities and Markets Authority (ESMA) said it fully supported the union, which will span all 28 EU member states and aims to further stabilize the EU financial system by opening up a wider range of funding sources.
It said the Union, which was outlined in a green paper released in February and subject to a three month consultation period that ended last week, was “crucial” to increasing the role of the non-banking sector and diversifying sources of funding, which will help access additional capital for investments. It added that to benefit from a Capital Markets Union, an increase in investor participation and trust will be essential.
“In order to achieve the aim of a unified capital market, the right environment to allow it to flourish has to be created,” said Steven Maijoor, ESMA chair. “This will involve ensuring that those ruled governing financial markets are applied, and supervised, in a consistent manner across all member states ensuring equal access for all.
“This in turn must be complemented by adequate levels of investor protection to build confidence in participating in this unified capital market.”
In the paper, the European Commission proposed that the Capital Markets Union will focus on accommodating international investment into the pan-European market, utilize the EU’s international trade and investment policy, and contribute to international work on the free movement of capital.
The European Fund and Asset Management Association (EFAMA) said a Capital Markets Union would benefit investors by unlocking capital and long-term investments.
Single pension market
It said that it is also important that the union promotes long-term savings and creates a single market for personal pensions, in order to encourage European citizens to save more for retirement. It added that the creation of a European personal pension product would offer the potential to increase the volume of retirement savings, while channeling them to long-term investments across the EU.
Peter de Proft, director general at EFAMA, said: “Europe is facing an important challenge, which is also a unique opportunity.
“We very much welcome the fact that EU policymakers are embracing the opportunities that the asset management industry offers in terms of supporting sustainable economic growth and long-term financing.”
In the paper, the Commission also said it would be: making it easier for firms to raise funding and reach investors cross border; working with the European asset management industry to put into place a pan-European private placement regime to encourage direct investment into smaller businesses; and supporting the take up on new European long-term investment funds to channel investment into infrastructure and other long-term projects.
The Wealth Management Association (WMA) said that retail investors must lie at the heart of the Union, and that retail investors and intermediaries must be allowed to choose appropriate products for retail investment, through appropriate routes to market.
It added that the Union must appropriately differentiate between different financial sectors, markets, and member state practices.
Liz Field, chief executive of the WMA, which represents over 180 wealth management firms and associate members, said: “The WMA welcomes the CMU initiative from the commission and we believe that is an excellent opportunity to utilise the millions of European retail investors in order to promote the jobs and growth agenda.
“The WMA calls upon the Commission to carry out an EU-wide survey of retail financial business, highlight best practice and publicise these strengths to improve retail access to capital markets and break down the barriers to retail investment.”