20 March 2017
Brussels
Reporter: Drew Nicol

EU market participants too busy for CMU


EU financial market participants are too bogged down in regulatory implementation to make the most of capital market opportunities, according to a BNY Mellon regional chief.

Mark John, head of product and business development for Europe, the Middle East and Africa at BNY Mellon, has warned that many market participants are currently too focused on “keeping their heads above the water with the pace of regulatory change” to make full use of the opportunities that the capital markets union (CMU) offers.

He said: “It is without question a positive development, but in the short-term both the buy and sell-side are dealing with only the compliance aspects, alongside their more pressing Markets in Financial Instruments Directive (MiFID) II requirements.”

John, commenting last week on the close of the European Commission’s brief public consultation on its capital markets union plan, suggested that markets won’t be ready to effectively review the past decade’s worth of regulation until 2019, when the union project is bedded down.

The commission’s consultation was cut short of the usual 12 weeks allocated for industry response in order to allow time for analysis in time for the June mid-term review.

“Firms on both the buy and sell side have been suffering from a tunnel vision leading them to compartmentalise regulatory projects, adding challenges and implementation costs,” John added.

“Companies which build a holistic plan based on their desired end result will not only comply with the current cycle of regulation more efficiently, but will be best placed to take advantage of the innovation opportunities which follow in a strengthened and transparent financial world.”

The EU’s CMU involves a €315 billion investment plan and a renewed drive to improve the free movement of capital, which remains fragmented across member states.

In a statement on the consultation, the European Commission said: “The review will seek to strengthen the current policy framework for the development of capital markets by updating the proposed actions and integrating complementary measures in response to key challenges.”

European Commission vice president Valdis Dombrovskis, responsible for financial stability, financial services and the CMU, said: "We have built good momentum behind the CMU project and we are well on our way to completing the first wave of measures. Now, we want to move faster and be more ambitious. This mid-term review consultation will help shape the next phase of our work to build a single market for capital in Europe.”

Jyrki Katainen, the commissioner responsible for jobs, growth and investment, added: "Progress towards building a CMU is crucial to strengthen the third pillar of the Investment Plan for Europe.”

“It will contribute to creating an investment friendly environment and make it cheaper and more interesting for insurance companies and banks to invest in long-term infrastructure projects."

More news
The latest news from Securities Lending Times
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
Pension plans accuse banks of anti-competitive behaviour
18 August 2017 | New York | Reporter: Drew Nicol
Three US pension plans have accused six of securities lending’s biggest banks of blocking nascent platforms and keeping the market for themselves
Repo passes judgement on MMF collateral rules
18 August 2017 | Brussels | Reporter: Drew Nicol
Thirteen industry stakeholders made up of major global banks and industry associations responded, with largely positive feedback on ESMA’s proposals
UBS expands securities lending team
17 August 2017 | Zurich | Reporter: Drew Nicol
UBS’s has regained Iwan Lichtsteiner as a member of its fixed income, securities lending and financing team, effective from October
Clearstream angling for central role in China’s market growth
17 August 2017 | Luxembourg | Reporter: Drew Nicol
Deutsche Börse Group and Clearstream representatives will be present at the Shanghai International Financial Advisory Council being at the end of August
Whitebox Advisors chooses Broadridge suite solution
17 August 2017 | New York | Reporter: Drew Nicol
Whitebox Advisors has mandated Broadridge Financial Solutions to transform its technology platform into a fully integrated, hedge fund operation
Clearstream confirms rates for September
16 August 2017 | London | Reporter: Jenna Lomax
The market infrastructure provider charges different rates for equities and debt, and on a per currency basis
CloudMargin unveils microsite for OTC derivatives
15 August 2017 | London | Reporter: Jenna Lomax
The new microsite, designed by UK-based design agency Eight Arms, was created to help financial institutions globally become accustomed to the new margin rules and other regulations affecting their collateral management functions