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Markets and Securities Services |
Europe
4
Overview
While the promise of the CMU currently
remains largely unfulfilled, and although it
has certainly been complicated by Brexit,
the European Commission’s continuing
commitment to the project nevertheless offers
a variety of opportunities (and challenges) for
the asset management industry.
The CMU has always been presented as both
a comprehensive aspiration — increased
capital market integration — and a diverse
series of policy proposals and initiatives
intended to support various pillars of that
integration. Also, asset management was
always meant to play an important role in
the CMU and, as a result, most of the CMU
workstreams have the potential to increase
the industry’s EU footprint either directly or
indirectly. As discussed in more detail below,
this primarily takes the form of widening and
unlocking investment flows from the retail and
professional investor pools (indirect) and then
trying to channel them to asset management
in specific ways (direct).
Broadly, the asset management-specific
initiatives focus on:
• Expanding the EU venture capital market.
• Minimising the impediments to cross-border
management and the marketing of
investment funds.
CMUATMIDTERM: ANOPPORTUNITY
FOR ASSET MANAGEMENT
REFLECTION AND ENGAGEMENT
As the European Commission is in the midst of its midterm review of the
Capital Markets Union (CMU), it is a timely moment for all European capital
markets participants to reflect on the CMU’s trajectory and what it can still
achieve. This is especially true of asset managers, as the CMU is in many
respects an important validation of the critical role the industry plays in
growth and capital formation. Of course, Brexit has complicated matters
considerably (as the Commission acknowledges). However, as discussed in
more detail below, the CMU’s policy framework underscores the central role
London currently plays in the European financial ecosystem and suggests
that the CMU’s successful implementation will require strong linkages
between the UK and EU27 to remain.
Strengthening public securities
offerings and private placements.
Creating a new category of
“high-quality” securitisations.
Improving the covered and
corporate bond markets.
Developing increased uniformity
on crowdfunding rules.
Addressing national discrepancies
on business insolvency, securities
ownership, and taxation.
• Creating new vehicles to manage, such as
the pan-EU pension product.
• Supporting increased investment in European
Long-term Investment Funds (ELTIFs) by
adjusting Solvency II risk charges.
However, the CMU appears to have a potential
indirect impact on asset management in a wide
variety of ways, including in terms of investment
opportunities by:
Likewise, the CMU workstreams in FinTech and
its focus on improving retail access to financial
services indicate a supportiveness of many of
the asset management industry’s innovations,
such as robo-advice.