EC Publishes Final Report on the High-Level Forum on the CMU

Following the creation of the European Commission (EC)’s High-Level Forum (HLF) in October 2019, and the subsequent publication of the its interim report in February 2020, today saw the release of the group’s final report.

The HLF, an expert group composed of highly experienced industry executives and top international experts and scholars, was formed in order to feed into the work on the future of CMU policies. This includes proposals for targeted policy recommendations for future of CMU actions, as well as to ensure that citizens and businesses can access capital markets across the EU on equal terms, irrespective of their geographical location.

In amongst the 17 policy recommendations outlined in the report, the following relate directly to the securities lending and financing markets.

  • Shareholder Rights Directive – the report makes three recommendations to the EC, putting forward a proposal for a shareholder rights regulation (providing a harmonised definition of ‘shareholder’), amending the shareholders rights legislation to clarify and harmonise the interaction between investors, intermediaries and issuers with respect to the exercise of voting rights and corporate action processing, and facilitation in the use of technology to enable wider investor engagement and to make corporate action processes more efficient in cooperation with NCAs.
  • Short Selling – the report remarks, as for SRD, amendments to the Short Selling regulation to facilitate the establishment of the European Single Access Point (ESAP) architecture, which would be the EU equivalent to the US EDGAR system.
  • CSDR – the report recommends that the EC conducts a targeted review of CSDR to strengthen the CSD passport, and improve supervisory convergence among national competent authorities. (No consensus on the possibility of further delaying the implementation of the mandatory buy-in requirement under CSDR and making it optional).
  • Market Making – the report remarks that the Commission should pay attention to provisions on the implementation of Basel III standards that may have an impact on market making, and that market making activities by investment firms should be supported through appropriately calibrated level II under the Investment Firm Regulation/Directive and targeted legislative amendments to the Capital Requirements Regulation/Directive.

ISLA welcomes the publication of this report, as it represents a clear and bold step towards the development of a broadly-based capital markets across Europe.

ISLA will be reviewing these policy recommendations in further detail, and ensuring that they form part of any new or ongoing advocacy efforts, as well as the work of the relevant regulatory working groups and streams.

Click here to see more details on the HLF, as well as access the interim as well as final reports.

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