On 30 September 2015 the European Commission published its Action Plan on Building a Capital Markets Union, a framework document with the overall aim of creating a true single market for capital in the EU. Given its focus, the Action Plan could be of significant interest to those in the financial services sector, including those involved in fund management.
The Action Plan identifies six areas for action and sets out steps to be taken over the next four years.
Key proposals for investment funds
Some of the key proposals set out in the Action Plan from an investment funds perspective include:
- Increasing funding choices for SMEs, with specific measures to modernise the Prospectus Directive and review other regulatory measures to removing barriers to small firms listing on equity and debt markets.
- Encouraging consistency in the regulatory practices of Member States to facilitate cross-border investing (although this is largely policy driven rather than legislative).
- Plans to support venture capital and equity financing by developing new pan-European fund structures, new ways to incentivise and promote new forms of corporate financing (for example, crowdfunding).
- A consultation on “the main barriers to the cross-border distribution of investment funds” due to be launched in Q2 2017.
- Launching a consultation on the review of the European Venture Capital Funds (EuVECA) Regulation and European Social Entrepreneurship Funds (EuSEF) Regulation, with a view to improving the take-up of these funds as part of the Action Plan package.
- The last of these – consultation on EuVECA/EuSEF – is already underway, and runs until 6 January 2016. The consultation recognises that existing take-up of the benefits offered by EuVECA is satisfactory at most (with only 34 EuVECA funds in total registered to date) and the take-up of the EuSEF benefits was less than satisfactory (with only 6 of such funds having been registered). Respondents to a previous consultation on the topic noted that take-up could be improved by extending the regimes to larger managers (they are currently only available to those falling underneath the AIFMD thresholds), lowering the minimum investment amount (€100,000 for non-professional investors), or removing individual Member State impediments, such as fees charged for accessing the EuVECA/EuSEF passports.
The development of a Capital Markets Union (as set out in the Action Plan) could be of particular benefit to funds and financial service firms, although how the Capital Markets Union manifests itself in reality remains to be seen. The proposed Action Plan timetable means that we will be monitoring developments for a number of years to come.