The Commission's Call for Evidence on the EU regulatory framework for financial services requests comment (by 6 January 2016) on the benefits, unintended effects, consistency and coherence of the package of (over 40 pieces of) EU legislation that has been adopted in direct response to the global financial crisis, so that it can assess the cumulative impact of those regulatory reforms.  In particular, the Commission is seeking evidence and concrete feedback on any rules which affect the ability of the economy to finance itself and grow, unnecessary regulatory burdens, inconsistencies and gaps in how the legislation interacts, and rules that give rise to unintended consequences.  Given that (at least some of) the legislative responses to the broad range of issues highlighted by the global financial crisis have been driven somewhat by political expediency and have not all been viewed as considered reactions to discrete (or even acknowledged) concerns, the opportunity for market participants to provide constructive feedback is enormously valuable and should not be missed.  In any event, the Commission notes that many of these legislative measures contain review clauses that require an assessment of their efficacy with a few years of their having taken effect, and that the results of the Call for Evidence will assist with those reviews, as well as developing new approaches (such as the regulatory model for covered bonds).  The Call for Evidence also presents an opportunity for respondents to consider holistically the last six or so years of European law-making across the financial services market and provide feedback accordingly.  The Commission will report on the findings from its review of the responses by mid-2016.  This may prove to be one of the areas of the CMU Action Plan that elicits a deluge of responses and it will be interesting to see how the structured finance market in particular responds to this opportunity and the overall outcome of the review. 

The proposed legislative package and consultative material accompanying the CMU Action Plan is extremely detailed (500+ pages in total) and complex, but (in particular) the explanatory material and preambles provide excellent background to the STS initiative, and summarise the numerous steps taken to regulate the securitisation market in the aftermath of the global financial crisis.  The Securitisation Regulation and the Regulation Amending CRR are currently subject to the co-decision legislative process and must now be approved by the European Parliament as the next stage in the process, prior to trialogue negotiations on the text (in this regard, it is worth noting that the legislative texts are now subject to negotiation and (potentially heavy) amendment and do not represent the final texts).  We expect that negotiations will continue to take place well into 2016, with final texts not expected before the end of 2016, which means that the likely implementation date will probably not be before the end of 2017.  The SCM Briefing will provide further updates as the texts are negotiated, further proposals are released (including the forthcoming consultation on the modernisation of the Prospectus Directive and a Green Paper on retail financial services), as the Commission moves towards finalising these important legislative provisions.  With a 2019 deadline set by the Commission for completing CMU, it is to be expected that work on these projects will be intensive over the coming few years. 

Useful links:

European Commission Press Release (containing all links), CMU Webpages and CMU Action Plan

Securitisation Regulation

Regulation Amending CRR

Consultation Document on Covered Bonds in the EU

Call for Evidence on the EU regulatory framework for financial services.