This article is provided in connection with the European Commission.
The European Commission today proposed measures to further develop the EU’s Capital Markets Union (CMU).
- Carry out EU clearance service More attractive and resilient, supporting the open and strategic autonomy of the EU and preserving financial stability.
- To harmonize specific corporate insolvency rules across the EU, It will help make them more efficient and facilitate cross-border investment.
- To ease – through New listing law – Management burden Companies of all sizes, especially SMEs, can gain greater access to public funding by listing on a stock exchange.
liquidation
The EU needs a safe, robust and attractive clearing for a fully functioning CMU. If liquidations do not work efficiently, financial institutions, businesses and investors face more risks and costs, as the 2008 financial crisis showed.
The measures proposed today are:
- Improve the clearing environment by enabling central counterparties (CCPs) that provide clearing services to scale their products faster and easier, and by further encouraging EU market participants to build liquidity by clearing on EU CCPs. make it more attractive.
- Strengthen the EU supervisory framework for the CCP and help build a secure and resilient clearing system by drawing lessons from recent developments in the energy market triggered by Russia’s aggression in Ukraine. For example, increasing the transparency of margin calls makes it easier for market participants (including energy companies) to predict margin calls.
- Reducing excessive exposure of EU market participants to third country CCPs. Today’s proposal requires all relevant market participants to hold active accounts with the EU CCP in order to clear at least a portion of certain structured derivatives contracts. This will improve the management of financial stability risks in the EU.
Corporate bankruptcy
Each Member State has a different bankruptcy regime. This is a challenge for cross-border investors who must consider a set of 27 different bankruptcy rules when evaluating investment opportunities.
Here are today’s suggestions:
- Harmonize certain aspects of insolvency proceedings across the EU. For example, the rules include:
- actions to preserve bankruptcy property (i.e. avoiding actions by debtors that reduce the value available to creditors);
- A creditors committee to ensure fair distribution among creditors of recovered value.
- So-called “pre-pack” proceedings (i.e. where the sale of the business is agreed before bankruptcy begins).
- Obligation of directors to file for bankruptcy in a timely manner to avoid devaluation of the company.
- Introduce a simplified system for micro enterprises to lower the cost of dismantling micro enterprises and allow business owners to be exempted from debt and make a fresh start as entrepreneurs.
- Requires Member States to prepare information fact sheets summarizing key elements of their country’s insolvency laws to facilitate decision-making by cross-border investors.
These measures will facilitate cross-border investment across the single market, reduce capital costs for companies and ultimately contribute to the EU’s CMU. Overall, the proposal’s benefits are expected to exceed €10 billion annually.
Listing law
Companies today face significant requirements when listing on the public market. For example, a prospectus document can be up to 800 pages long.
Here’s today’s fix:
- By simplifying the documents required for a company to list on the public market and streamlining the scrutiny process by national supervisors, it will speed up the listing process and reduce costs wherever possible. For example, it is estimated that EU-listed companies can save around €100 million a year from reduced compliance costs, and companies can save €67 million a year just from simplified prospectuses.
- Simplify and clarify some market abuse requirements without compromising market integrity.
- Make companies more visible to investors by facilitating investment research, especially for SMEs.
- By enabling company owners to list in the small business growth market using a multiple voting share structure, they retain full control of the company after going public while retaining the rights of all other shareholders. You can protect it.
These measures will further develop CMU by reducing unnecessary paperwork and costs for businesses. This will encourage the company to list and remain listed on his EU capital markets. Easier access to public markets will allow companies to diversify and complement their available funding sources.
Details and next steps
A clearing package consists of:
- communication;
- Regulation amending the European Market Infrastructure Regulation (EMIR), Capital Requirements Regulation (CRR) and Money Market Funds (MMF) Regulation.
- A Directive amending the Capital Requirements Directive (CRD), the Investment Firms Directive (IFD) and the Directive on Collective Investments in Transferable Securities (UCITS).
A listing package consists of:
- Amendment Regulations amending the Prospectus Regulations, the Market Abuse Regulations and the Financial Instruments Market Regulations;
- Amendment Directive amending the Markets in Financial Instruments Directive and repealing the Listing Directive; and
- Directive on multi-voting shares.
- The Corporate Insolvency Package consists of:
- Directive on Corporate Insolvency.
Each of the six legislative proposals will be submitted to the European Parliament and the Council for adoption.
