Council of the
European Union
Brussels, 16 June 2015
(OR. en)
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NOTE
From:
To:

General Secretariat of the Council
Permanenet Representatives Committee (Part 2) / Council

Subject:

Draft Council conclusions on a Capital Markets Union

Delegations will find attached the draft Council conclusions on a Capital Markets Union, as
prepared by the Economic and Financial Committee.

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ANNEX
Draft Council conclusions on a Capital Markets Union

The Council:

1.

RECALLS its Conclusions of 9 December 2014 on Finance for Growth and the Long-term
Financing of the European Economy 1 in order to further build on the policy targets and
principles contained therein;

2.

RECOGNISES that although EU capital markets have expanded over recent decades, they
remain fragmented and less developed as compared to those in some other comparable
jurisdictions, in particular in certain market segments crucial for jobs and growth such as
securitisation and venture capital;

3.

CONSIDERS that more developed and more integrated capital markets could unlock
investment for companies and infrastructure projects, attract foreign investment, contribute to
growth and job creation and make the financial system more efficient, robust and resilient to
shocks;

4.

WELCOMES therefore the Commission’s initiative of building a Capital Markets Union
(CMU) and the wide range of issues being considered in this context;

5.

SUPPORTS the Commission's step-by-step approach based on a thorough analysis and
consultation of all the key stakeholders, including market participants, which combines longterm ambition, using the CMU as a lever for growth and investment, with key short term
concrete actions producing visible, early impact to gather momentum;

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6.

AGREES on the need to broaden and diversify sources of financing for European companies,
especially SMEs, bearing in mind the need to create effective conditions for healthy
competition between banks and non-banks in the European financial system and
RECOGNISES in particular the need to strengthen the equity culture in the EU and to
encourage long-term investment in companies, rather than rely excessively on debt;

7.

STRESSES, given the importance of SMEs for the creation of new jobs and growth, the
importance of focusing on improving bank financing as well as on developing non-bank
financing opportunities for all SMEs from smaller or larger financial markets, in order for
such companies to be offered a wider range of financing choices, giving also particular
attention to high-growth potential SMEs;

8.

RECALLS the importance of increasing retail investment and ensuring robust investor and
consumer protection, by combining, with a focus on synergy and efficiency, actions by the
national supervisory authorities and by the ESAs in the exercise of their existing mandates,
when developing the CMU project;

9.

STRESSES that the principles of subsidiarity and proportionality should be respected in any
future related initiative and that financial market stability should not be put at risk;

10. CONSIDERS that the CMU should be seen as complementary to bank financing as banks will
continue to play a key role in financing the economy and should take into account the role of
institutional investors, including insurance companies on relevant markets, in financing
European companies, and RECOGNISES the need to consider approaches enhancing access
to intermediated financing for companies as a necessary complement to the CMU;

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11. STRESSES that the CMU should encompass all 28 Member States, while taking account of
the various degrees of development of capital markets and their different levels of size and
integration, and AGREES that, notwithstanding such differentiations, the benefits of
integrated capital markets should be reaped throughout the entire Union, by both those with
large existing capital markets and those with smaller or/ less developed ones. The CMU
should make it easier for both larger and smaller companies to obtain access to capital on
more attractive terms, while also focusing on the specific needs of innovative, high growth
potential SMEs;
12. ACKNOWLEDGES that well-functioning capital markets can ensure a better and more
uniform transmission of monetary policy as deeper cross-border capital markets allow for
better private market risk sharing for all 28 Member States and in particular the euro area;
13. CONSIDERS that deepening the single market, and promoting long-term investment, as well
as improving access to finance should be one of the main objectives of the CMU and in this
context SUPPORTS the process of promoting ESG (Environment, Social and Governance)
investment; RECOGNISES in addition that significant investments in infrastructure need to
be made in the EU to support competitiveness and growth, which requires long-term finance
from different sources, including institutional investors; HIGHLIGHTS in both these respects
the important catalysing role of the new European Fund for Strategic Investments (EFSI) and
of the European Long-Term Investment Funds (ELTIFs);
14. STRESSES that work on the CMU should take into account international work to understand
and if necessary address financial stability risks in capital markets, as well as any consistency
issues; and RECALLS the need to ensure that Europe’s capital markets can compete on a fair
basis with other economic areas, based on sound financial regulation; and URGES to further
address barriers to the free movement of capital;

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Short-term priorities for action

15. RECOGNISES that securitisation can provide an effective mechanism to transfer risk from
bank lenders to non-bank operators, thus increasing banks' capacity to lend, but also to
channel non-bank financing towards the working capital of companies and CALLS on the
Commission to propose a framework for simple, transparent and standardised securitisation,
building on the numerous ongoing initiatives at European and international levels, as a matter
of priority at the latest by the end of 2015, including a clear overarching definition of such
securitisations, ensuring consistency of the common key aspects across different sectoral
legislations, , and a sound mechanism for verifying qualifying securitisations, and areas where
these deserve a preferential treatment, as well as an appropriate calibration thereof. Any
preferential treatment should not endanger financial stability;
16. NOTES the Commission's intention to come forward with pragmatic solutions to increase
venture capital, crowdfunding, as well as other forms of alternative finance that may be
attractive sources of funding for smaller firms and high-growth companies while at the same
time preserving investor protection;
17. CONSIDERS that easily available, reliable and comparable credit information is important
for improving access to finance, and diversifying investor base, for SMEs, so as to allow
proper due diligence by investors and avoid overreliance on ratings; therefore STRESSES the
need to enhance and streamline access to credit information while keeping the provision of
data on a voluntary basis where justified for certain SMEs, and minimising the burdens on
SMEs in the EU and CALLS for prioritising further analysis, to achieve that whilst
recognising the different market structures for providing access to credit data throughout the
Union without placing additional burdens on SMEs;

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18. Broadly SUPPORTS the work underway to identify existing barriers to the free movement of
capital, and to remove the most damaging ones, noting that a roadmap will be developed
together with Member States;
19. RECOGNISES the potential of private placements and mini-bonds for corporate lending
including, where relevant, SMEs financing in the EU and LOOKS FORWARD to the results
of the Commission’s analysis of existing practices, risks and possible future actions, as well
as to the ongoing private sector’s initiatives undertaken in view of the standardisation of
practices and documentation for private placements;
20. CONFIRMS the need to simplify and streamline the process for preparing and, where
appropriate, approving the prospectus, ensuring an appropriate balance between achieving
adequate investor protection and confidence and minimising the burden on businesses;
NOTES the importance of this issue for the offering on public markets of securities by
companies and in particular the need to improve SMEs' transparent and efficient access to
capital markets and to reduce the burden on SMEs, and LOOKS FORWARD to considering
the legislative proposal that is being prepared by the Commission;

Medium to long-term action

21. STRESSES that concerning medium and long term actions, an ambitious approach is needed,
requiring work to be started immediately in order to garner evidence-based analysis, on which
a prioritisation can be made, also taking into account potential interactions between individual
initiatives, and their interaction with existing legislation;

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22. RECOGNISES that achieving a CMU will require a broad range of initiatives aimed at
stimulating and matching the supply-side and the demand-side of finance. In order to ensure
cross-sectorial consistency, work to prepare the CMU should carefully evaluate the
cumulative effect of legislative changes since the financial crisis and assess the need for
proportionate measures to:
- enhance liquidity and market making, especially on asset classes where liquidity has
recently diminished; and,
- improve cross-border investment in corporate debt and equity securities;
- increase investment capacity in the Union, where necessary through appropriate adjustments
of the prudential framework for key finance providers, such as insurance companies, while
taking due account of financial stability considerations;
- remove barriers to marketing and growth of investment funds and their operation cross
border, in recognition that such funds are a significant source of finance in the EU;
23. CONSIDERS that improving 'financial ecosystems' throughout the Union, in particular
through promoting entrepreneurship, improving corporate governance practices, diversifying
the sources of financing and enhancing financial literacy is of key importance;
24. CONSIDERS that a fully functioning CMU should rely on an efficient, effective and stable
investment chain supported by robust market infrastructures and foster a well-functioning
cross border flow of collateral;

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25. CONSIDERS that a long-term structural policy agenda should go beyond initiatives in the
field of financial services and that building an effective CMU will also require further
analysis of possible barriers in related areas such as insolvency, securities and company law
whilst also having regard to the respective tax treatments of equity and debt financing with a
view to fostering neutrality between the fiscal treatment of these, taking into account the
importance of national competences in these areas; NOTES the importance of undertaking
working on addressing these barriers to ensure the long-term success of CMU; and,
STRESSES the need to start technical work in these areas;
26. Recalling the Council Conclusions on the ESFS Review from 7 November 2014 2, STRESSES
that the European Supervisory Authorities should make full use of their existing mandates to
enhance supervisory convergence and ensure coherent application of financial regulation
across the Union as well as effective market oversight and investor protection while observing
Level 1 directions, and AGREES that this will contribute to making CMU a success;
ACKNOWLEDGES that the functioning of the ESFS will be reviewed in the future, but
invites the ESAs to bring to the attention of the Council any issues that in the meanwhile
hamper their ability to fulfil their existing mandates, so that the Council can act appropriately
to support the ESAs fulfilling their existing mandates; whilst taking the development of CMU
into account;
27. NOTES the need to ensure adequate supervision of relevant segments of the capital markets
and to strengthen the macro-prudential toolkit beyond banking, and specifically into the areas
of investment, securities and shadow banking, in order to reap the potential benefits from
financial integration through the development of the CMU, without raising concerns for
financial stability;

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Next steps

28. INVITES the Commission to consider the full range of possible actions, taking into account
the outcome of its consultation process, in order to identify the most effective and expedient
manner to improve the functioning and integration of EU capital markets and
ENCOURAGES it to elaborate by September 2015 a comprehensive, targeted and ambitious
action plan for building the CMU;
29. STRESSES that this action plan should take into account the specific features and needs of
SMEs and the various potential impacts of the CMU on EU capital markets, including the
smaller and less-developed ones;
30. EMPHASISES that the action plan should be grounded on a roadmap with clear prioritisation
of actions and a timeline with clear and realistic milestones, and that policy interventions
should be adjusted in response to ongoing monitoring before, during and after implementation
to address any unintended consequences on the basis of ex-ante policy indicators and ex-post
impact assessments;
31. LOOKS FORWARD to considering the Commission action plan with a view to identifying a
clear set of priorities and an initial roadmap for building the CMU.
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