The Capital Markets Union (CMU) is a plan of the European Commission that aims to create deeper and more integrated capital markets in the 28 Member States of the EU. The key aims include:

  • Providing alternatives to bank finance and greater diversification of funding to the EU economy.
  • Improving access to finance in Europe for corporates, particularly for SMEs.
  • Boosting the flow of institutional, retail and international investment into the EU’s capital markets.
  • Promoting greater competition and choice in capital markets.

The priorities identified for immediate action include:

  • A review of the current prospectus regime.
  • The development of an efficient and sustainable capital market for SMEs by building a common set of comparable information for credit reporting, scoring and assessment of SMEs.
  • The promotion of a high quality securitisation market.
  • Promotion of ELTIFs to boost long term investment.
  • Development of a European private placement regime to encourage direct investment in smaller businesses, focussing on standardisation of documentation and legal frameworks.

From a funds industry perspective, proposals include:

  • Reducing the cost of setting up funds and cross-border marketing more generally.
  • Encouraging the growth of private equity and venture capital in Europe.
  • Promoting the take-up of EuVECAs and EuSEFs
  • Facilitating the direct marketing of EU investment funds in non-EU markets.
  • Encouraging greater cross-border retail participation in UCITS.
  • Addressing requirements imposed by host Member States under European marketing passports that could constitute an unjustified barrier to the free movement of capital.

The Commission also aims to identify the main obstacles to integrated capital markets arising from company law, corporate governance, insolvency and taxation frameworks.