Merging national stock exchanges and clearing houses and pan-EU supervision are the next steps needed to achieve a better capital market for the bloc, its financial services chief said.
European Union member states should set aside such “national symbols” and recognise that consolidation is crucial to develop a single market for capital, said Mairead McGuinness.
Countries have long blocked efforts to centralise supervision and consolidate market players, but discussion on this is needed to end fragmentation, she said, adding that the need was now more pressing as EU financial centres like Frankfurt and Paris face post-Brexit competition from London.
“Does it really make sense to have numerous trading venues with very few or even no initial public offerings (IPOs)?” McGuinness said in a speech at a joint commission and European Central Bank event in Frankfurt on Tuesday.
“And in the same way, does it make sense to have some twenty Central Security Depositories when the US has only one?”
The EU’s decade old capital markets union (CMU) project has made some progress but faces opposition on key issues.
These include centralising supervision and streamlining tax and insolvency rules, with progress on opening up cross-border markets to retail investors also slow.
The upshot is that a company operating across member states may have to deal with several different regulators which may each have different interpretations, McGuinness said.
EU leaders, opens new tab recently backed fresh attempts to fast track CMU when a new European Commission, which has powers to propose laws, takes office in the autumn, even to the extent of some states going it alone.
But tinkering at the edges will not create a CMU that can fund the huge investments needed, said McGuinness.
“We could start with groups or market infrastructures that provide services across the whole of the single market. And this could be through an opt-in regime or joint supervision.”
The Commission will consult in the autumn on scaling up the EU’s securitisation market, she said.
