The Capital Markets Union is intended to give Europe's economies more financial stability and resilience to weather times of crisis better. In November 2019, the EU Commission set up the High-Level Forum on Capital Markets Union (HLF), a 24-member committee of experts from academia, industry, and civil society, to make specific recommendations for policies to complete the Capital Markets Union. The HLF recently presented a total of 17 recommendations and thus new rules for a single European capital market. This "new vision", as stated in the HLF final report, was discussed at the SAFE Policy Webinar on 2 July 2 under the title "A 'Game Changer' for Europe's Capital Markets?"
SAFE Fellow and HLF member Katja Langenbucher as well as HLF Chairman Thomas Wieser had an intensive exchange of views with Niamh Moloney, Professor at the London School of Economics and Board Member of the Central Bank of Ireland, and SAFE Director Jan Pieter Krahnen.
Thomas Wieser emphasized that the HLF final report follows a holistic approach by presenting a detailed roadmap with recommendations on how to achieve more integration for Europe's capital markets step by step. "While many discussions focus on raising capital and thus on the supply side, the recommendations also target the demand side and market infrastructure," said the HLF Chairman.
More powers for ESMA?
Katja Langenbucher explained that the recommendations presented by the HLF are not about selecting the appropriate options in isolated cases. Rather, the experts' proposals are closely interwoven and should therefore be considered together. Nevertheless, there is a focal point: "Our report focuses on raising capital, especially for small and medium-sized enterprises and small investors," Langenbucher said.
The diversity of capital market rules and their different enforcement at national level causes legal uncertainty and even prevents SMEs from going public, Langenbucher illustrated further. The Market Abuse Regulation, for example, offers a very broad definition of what is to be considered insider information. "Thus, what kind of information has to be disclosed and when depends crucially on the respective national authority," said the professor for private law, corporate and financial law. According to the HLF recommendations, the European Securities and Markets Authority (ESMA) should have a mandate to clearly define insider information.
At this point, Jan Krahnen argued that, particularly with a view to investor protection, consideration should be given to implementing a single supervisor for the European capital markets similar to the US model. Niamh Moloney contradicted this, however, and stressed that the very idea would waste too much political energy. "It is right to give ESMA a broader mandate," said Moloney. This would include, for example, the power to regularly review key EU regulations to determine whether supervisory convergence has been achieved across Europe.