Cash & Liquidity ManagementInvestment & FundingCapital MarketsEurope’s CMU progress ‘paves way for return of innovation’

Europe’s CMU progress ‘paves way for return of innovation’

Today marks the closing day of the European Commission’s public consultation on the capital markets union (CMU) mid-term review.

The European Commission’s (EC) public consultation on the capital markets union (CMU) mid-term review, which closes today, paves the way for the return of innovation, according to BNY Mellon’s Pershing, the bank’s clearing services business.

The eight-week consultation period, which began January 20, aims to gather feedback on how the current CMU programme can be updated and completed so that it represents a strong policy framework for the development of capital markets, building on initiatives that the EC has presented so far.

When it launched the consultation eight weeks ago, the Commission commented: “Good progress has been made on the venture capital package of the CMU Action Plan” but conceded that other options could also be explored” given that “venture debt … is well developed in the US but is in its infancy in the European Union (EU).”

“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 CMU offers,” comments Mark John, Pershing’s head of product and business development for Europe, the Middle East and Africa (EMEA).

“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. Many firms are compounding their challenges by addressing regulation on an individual basis, without the resources or infrastructure in place to benefit from the efficiencies gained from a holistic approach.

“By the end of 2019, after the implementation of CMU, the industry will be in a better position to reflect on a decade’s worth of post-financial crisis, regulation-driven progress. A short period of evaluation, with necessary adjustments to the systems and processes that have been built, will then lay strong foundations for long-awaited innovation.

“This groundwork, in conjunction with the opportunities the CMU offers, will provide the basis for innovation that will finally allow financial services firms to move forward with exciting, revenue-generating projects from 2020.

“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. 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 Commission has been developing CMU, a set of plans aimed at freeing up capital to boost the European economy, over the past 18 months. They includes proposals to promote securitisation – the repackaging of loans, mortgages, or other contractual debts, and then selling off the risk on those loans, which became controversial after it was identified as a major contributor to the 2008 financial crisis in the US.

 

Related Articles

BigTech in financial services may require sweeping new laws

Big Data BigTech in financial services may require sweeping new laws

3d Jay Ashar
Open season on Open Banking

FinTech Open season on Open Banking

3d Jonathon Tanner
AccessPay appoints Tim Butchart as Chief Revenue Officer

Cash Management Regional AccessPay appoints Tim Butchart as Chief Revenue Officer

1w Jay Ashar
Capgemini: Will big tech make big waves in 2020?

FinTech Capgemini: Will big tech make big waves in 2020?

2w Tom Lemmon
Is it time for banks to think like big tech?

Banking Is it time for banks to think like big tech?

3w Austin Clark
Bank of America: The future is fast, smart and secure

Banking Bank of America: The future is fast, smart and secure

1m Austin Clark
Reversing the cultural trend: how Europe is driving technology innovation to influence the US

Banking Reversing the cultural trend: how Europe is driving technology innovation to influence the US

1m Santosh Radhakrishnan
Unlocking value: maximising the potential of supply chain finance

Banking Unlocking value: maximising the potential of supply chain finance

1m Alexander Pawellek

Whitepapers & Resources

Transaction Banking Survey 2019

Transaction Banking Survey 2019

3m
TIS Sanction Screening Survey Report

Payments TIS Sanction Screening Survey Report

5m
Enhancing your strategic position: Digitalization in Treasury

Payments Enhancing your strategic position: Digitalization in Treasury

7m
Netting: An Immersive Guide to Global Reconciliation

Netting: An Immersive Guide to Global Reconciliation

10m