Brussels launches its plan to integrate financial markets and close the stock market gap with the US
Completing the single market is one of the EU’s great goals for the short and medium term and this Thursday Brussels has presented a series of measures aimed at eliminating barriers to financial services. “This package is a central component of the Savings and Investment Union (SIU) strategy, which aims to create a more integrated, efficient and competitive financial system that offers EU citizens better options to increase their wealth and helps companies access financing,” explains the European Commission.
The objective is to close the stock market gap that exists between the Union and the United States. The market capitalization of the block remains at 73% of GDP compared to 270% in Washingtonwarns the Commission in its presentation.
The Community Executive wants to allow market participants to operate more fluidly in all Member States, thus reducing cost differences between national and cross-border transactions. “The proposed measures include improving passport opportunities for regulated markets (RM) and central securities depositories (CSD), the introduction of ‘pan-European market operator’ (PEMO) status for trading platform operators in order to rationalize corporate structures and licenses into a single entity or license format, and the rationalization of cross-border distribution of investment funds (UCITS and AIFs) in the Union,” they add.
On the other hand, the package presented focuses on removing regulatory barriers to innovation related to distributed ledger technology (DLT). They explain from Brussels that the regulatory framework is adapting to support these technologies and amends the DLT Pilot Regulation (DLTPR) to relax the limitsincrease proportionality and flexibility, and provide legal certainty, thus encouraging the adoption of new technologies in the financial sector.
It’s not just about simplification, they maintain. Improvements in the supervisory framework are closely related to the removal of regulatory barriers. And that is why the Commission wants to “address the inconsistencies and complexities arising from fragmented national approaches to supervision, making it more efficient and conducive to cross-border activitieswhile responding to emerging risks.”
This includes the transfer of direct supervisory powers over significant market infrastructuressuch as certain trading venues, central counterparties (CCPs), DCTs and all crypto asset service providers (CASPs), to the European Securities and Markets Authority (ESMA), as well as improving ESMA’s coordination function in the asset management sector.
“For too long, Europe has tolerated a level of fragmentation that slows down our economy“, lamented the European Commissioner for Financial Services, Maria Luis Alburquerque. For this reason, she argued, Brussels “made the deliberate decision to change course” for the future. “By building a truly single financial market, we will offer citizens better opportunities to increase their wealth and we will unlock more solid financing for Europe’s priorities. Market integration is not a technical exercisebut a political necessity for Europe’s prosperity and global relevance,” he concluded.
