The European Commission CMU capital markets action plan

On 24th of September the European Commission published the Capital Markets Union Action Plan which aims to deliver on 3 key objectives; i) support a green, digital, inclusive and resilient economic recovery by making financing more accessible to European companies; ii) make the EU an even safer place for individuals to save and invest long-term; and iii) integrate national capital markets into a genuine single market. The Action plan is an operational tool for delivering on the EU’s vision of European public markets, and a follow-up on the CMU High Level Forum report published in July this year. Our write up on that paper can be found here What does the final report of the EU’s Capital Markets Union mean for stock exchanges ?

We are particularly fond of how the EC in its announcement describes the aim of the CMU; to get money – investments and savings – flowing across the EU so that it can benefit consumers, investors and companies, regardless of where they are located. We could not agree more. But we’d like to add that in order to achieve that objective Europe will have to offer those investors a flow of investment opportunities and a steady supply of data needed to make informed investment decisions.

For companies, especially SMEs, going to market and staying in market needs to become cheaper, faster, and overall a more attractive proposition. For investors, the financial and non-financial information on those companies needs to be structured and available at their fingertips. The future of European capital markets is a CMU designed by forward-looking regulation and enabled by technology, to create a single digital ecosystem where market participants come together and where data flows seamlessly.

EC believes that digitalisation will require significant private investment if the EU’s economy is to remain competitive globally, while mastering technological advancement is critical for the EU’s financial sector to gain in efficiency, to improve access to capital. It’s great to see a recognition of the role of technology in the paper. It is very important for the policy makers to fully realise the transformative immediate effect technology and digitalisation can have on making the CMU idea a reality.

Good examples of technology enabled points from the Action plan are; Action 1 –  Setting up of European single access point, Action 2 – Supporting SMEs access to public markets, and Action 8 – Building retail investors trust in capital markets. European single access point to exist needs a digital flow of financial and non-financial structured data, SMEs to raise capital need can a faster streamlined and automated process, and for retail investors to have trust in the system investment decisions have to be driven by a constant stream of utilisable, trusted, structured data and information. Each of these points can be enabled and accelerated by use of technology and digitalisation. The timelines for all 16 action points from the paper are very challenging. We are looking forward to seeing policy makers, industry, and regulators come together with solutions on how these targets can be most efficiently achieved. We will be contributing to those efforts with our tech driven solutions and our vision of a digital capital markets ecosystem.