Confederation of Finnish Industries EK sees a lot of good initiatives by the European Commission which has today published a communication on the next steps of Capital Markets Union, CMU. Nevertheless, it needs to be ensured that some of initiatives do not turn into burdensome new regulation for companies.
More listings – yes, please
EK warmly welcomes the objective number 1: make financing more accessible to EU companies. The CMU is needed to provide more diversified funding opportunities for companies in the EU and reduce their over-reliance on funding through banks. This objective has increased in importance since 2020, as companies emerge from the COVID-19 crisis in need of increased capital, notably equity. By delivering more integrated and developed capital markets, the CMU provides opportunities for companies to access larger and more liquid pools of funds directly from investors.
The Commission has opened a public consultation on listings.
The consultation contains many constructive openings on the objective how to generate more listings in the EU. For EK it is clear that the rules governing companies’ listing on public markets need to be further simplified. In addition, we have seen that slightly lighter rules for SMEs can generate very positive outcomes.
Integrate national capital markets into a genuine single market
The EU’s global competitiveness is weakened by the fragmentation of its capital markets. The CMU actions seek to remove barriers to cross-border investment, including deep-rooted barriers, such as diverging and inefficient insolvency frameworks or withholding tax rules, and to strengthen EU-wide passports for the provision of services. EK believes this will in turn help companies tap into larger pools of capital held by institutional and retail investors across the EU.
Retail investors need protection – but not at all costs
How to find a right balance between ensuring efficient markets and the right level of investor protection which is essential to empower retail investors to use the opportunities given by the EU capital markets? The objective of the upcoming retail investment strategy, scheduled for adoption in 2022, is to put retail investors’ interests centre-stage. It is important that we focus on making the EU an even safer place for individuals to save and invest long-term. Savers should be able to invest in financial products that are most suited to their investment and risk preferences – including, for a growing number of them, Environmental Social Governance (ESG) products.