**Commission Action Plan**
On September 24, the European Commission published its long-awaited CMU Action Plan outlining in details how it intends on creating a fully-functioning, deep, and truly integrated CMU over the remaining Presidency mandate ending in 2024. In parallel, the European Parliament has also adopted its own-initiative report on the CMU on October 9 by a large majority in plenary session, which support all initiatives put forward by the Commission.
The new CMU action plan comes after renewed political pressure on the financial services sector to help with the COVID-19 recovery, and amid growing calls from MEPs for the EU to establish its own ‘strategic autonomy’ post-Brexit. The Action Plan is also intimately linked to other key Commission initiatives, namely the European Green Deal and the new Digital Strategy, with the sector likely to be called upon over the coming years to help finance these projects.
It sets out 16 specific and targeted recommendations grouped under three objectives:
1) Supporting the economic recovery and financing of business, especially SMEs The Commission aims at facilitating the funding of companies through capital market instruments and making companies more visible to investors by improving access to company data, simplifying listing rules for SMEs, and further developing long-term investment vehicles.
2) Ensuring investor protection and participation The Commission mainly addresses the low level of retail participation in Europe by building citizens’ trust and confidence in capital markets, as well as enhancing financial literacy. It also plans to improve the availability and comparability of information related to capital markets products
3) Facilitating cross-border investments: Bringing all 27 national markets together so all member states can better benefit from the free flow of capital and investment. This includes direct supervision. The IA position paper on the Capital Markets Union can be found here.
The Action Plan foresees a legislative proposal for Q3 2021 to provide cross-border investors with accessible and comparable data, including both financial and sustainability-related data. The creation of an ESAP would improve the ability for SMEs to access new sources of capital by increasing visibility to investors and provide the consistency and comparability of information needed.
The Commission published its consultation on the review of ELTIF on October 19 2020 which will close on 19 January 2021. This will be followed by a legislative proposal expected for Q3 2021. The review takes into account the recommendations from the CMU High Level Forum’s final report on how to (1) improve the effectiveness of the regulatory regime for ELTIFs and their managers, (2) alleviate the administrative burden where possible, and (3) maintain adequate investor protection safeguards.
The Commission aims at developing pension dashboard for member states and best practices on auto-enrolments and will send a call for advice to EIOPA by Q4 2020 to identify the data and methodology needed to develop pension dashboards. The Commission will also will seek to develop best practices for the set-up for national tracking systems by Q4 2021. In addition, an external study will be launched in Q3 2020 to analyse existing auto-enrolment practices in occupational pension schemes, with a view to developing best practices.
The Commission is currently working on a horizontal retail investment strategy due for the second half of next year. This will include targeted changed through individual legislative reviews of PRIIPs, MIFID II, and IDD in order to strengthen investor protection and facilitate investment. It will also lay the ground of the creation of a retail investment product database due to be ready for 2025.
The Commission will conduct a feasibility assessment for the development of a dedicated EU financial competence framework by Q2 2021. The aim is to promote a shared understanding of financial competence and to provide a basis for the development of financial competence in various applications and settings. In addition, the Commission will conduct an impact assessment for specific amendment for MiFID, IDD, PEPP, UCITS and PRIIPs by Q1 2021 requiring Member States to promote financial education of consumers, in particular in relation to responsible investing
The Commission envisages a possible legislative proposal on direct supervision in Q4 2021. While the final report of the Commission’s High-Level Forum on the CMU remained nuanced on this topic, the Commission announced it will review the ESA’s powers in upcoming sectoral legislative reviews and consider whether ESMA would be granted additional supervisory powers. Similar political messages around EU supervision emerged in the Digital Finance Strategy and the AML Action Plan, in particular following the Wirecard scandal.
