EU-flash: STS Securitisation, deepening EMU and Mid-Term Review of the CMU

16/06/2017

Op 30 mei 2017 heeft de Raad een akkoord bereikt met de Europese Commissie en het Europees Parlement over de voorstellen die de ontwikkeling van een securitisatiemarkt in Europa moeten bevorderen. Een dag later publiceerde de Commissie een discussienota over de verdieping van de Economische en Monetaire Unie. Op 8 juni kwam ze naar buiten met haar mid-term review van het actieplan Kapitaalmarktenunie.

Hieronder vindt u een Engelstalige samenvatting van deze topics terug.

Agreement reached on securitisation

On 30 May 2017, the European Parliament, Council and Commission reached agreement on proposals aimed at facilitating the development of a securitisation market in Europe. 

One of the main political issues resolved relates to a so-called risk retention requirement. This refers to the interest in the securitisation that originators, sponsors or original lenders of securitisations need to retain themselves. The requirement will ensure that securitised products are not created solely for the purpose of distribution to investors. 

The negotiators agreed to set the risk retention requirement at 5%, in accordance with existing international standards and in line with the Council's negotiating position. 

Other elements agreed with the Parliament include: 

  • the creation of a data repository system for securitisation transactions, which will increase market transparency;
  • ​a light-touch authorisation process for third parties that assist in verifying compliance with STS securitisation requirements. The aim is to prevent conflicts of interest.

The agreement will be submitted to EU ambassadors for endorsement on behalf of the Council, following technical finalisation of the text. Parliament and Council will then be called on to adopt the proposed regulation at first reading.

Commission sets out possible ways forward for the deepening of Europe's Economic and Monetary Union

Following the Commission's White Paper on the Future of Europe, the Commission presented on 31 May, a reflection paper on the deepening of the Economic and Monetary Union.

The options proposed in the reflection paper are intended to help build a broad consensus on how to take on the challenges ahead and to give a fresh impetus to this important debate.

Moving ahead would involve taking steps in three key areas:

  1. Completing a genuine Financial Union: This will involve completing the Banking Union and making progress on reducing and sharing risks in the banking sector. Delivering on Capital Markets Union is also paramount.
  2. Achieving a more integrated Economic and Fiscal Union: Already the Five Presidents' Report recognised the convergence towards more resilient economic and social structures in Member States as an essential element for a successful Economic and Monetary Union in the long run. Member States could decide to improve the capacity of macroeconomic stabilisation of the euro area. The paper outlines several different options for this, which the Commission will look into.
  3. Anchoring democratic accountability and strengthening euro area institutions: For the Economic and Monetary Union to be stronger, Member States must accept to share more responsibilities and decisions on euro area matters, within a common legal framework. Further political integration could involve a rethinking of the balance between the Commission and the Eurogroup and could justify the appointment of a full-time permanent Eurogroup chair, as well as unifying the euro area's external representation. The idea of a euro area Treasury – possibly with a euro area budget – as well as a European Monetary Fund are also discussed in the public debate, and could be considered at a later stage of the deepening of Economic and Monetary Union, within the EU framework.

For more information.

Mid-Term Review of the CMU

On 8 June, The Commission presented its Mid-Term Review on the Capital Markets Union.

The Mid-Term Review reports on the good progress made so far in implementing the 2015 Action Plan, with around two-thirds of the 33 actions delivered in twenty months.

The Review also sets the timeline for the new actions that will be unveiled in the coming months.

The CMU Mid-term review sets out nine new priority actions:

  1. strengthen the powers of European Securities and Markets Authority to promote the effectiveness of consistent supervision across the EU and beyond;
  2. deliver a more proportionate regulatory environment for SME listing on public markets;
  3. review the prudential treatment of investment firms;
  4. assess the case for an EU licensing and passporting framework for FinTech activities;
  5. present measures to support secondary markets for non-performing loans (NPLs) and explore legislative initiatives to strengthen the ability of secured creditors to recover value from secured loans to corporates and entrepreneurs;
  6. ensure follow-up to the recommendations of the High Level Expert Group on Sustainable Finance;
  7. facilitate the cross-border distribution and supervision of UCITS and alternative investment funds (AIFs);
  8. provide guidance on existing EU rules for the treatment of cross-border EU investments and an adequate framework for the amicable resolution of investment disputes;
  9. propose a comprehensive EU strategy to explore measures to support local and regional capital market development.

In addition, the Commission will advance on outstanding actions under the 2015 Action Plan. In particular, the Commission will put forward:

  1.  A legislative proposal on a pan-European personal pension product to help people finance their retirement; 
  2. A legislative proposal for an EU-framework on covered bonds to help banks finance their lending activity;
  3. A legislative proposal on securities law to increase legal certainty on securities ownership in the cross-border context.

Full details.

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