Head of Public Affairs & Policy for the European Association of Corporate Treasurers (EACT)
Much of the public discourse over the past weeks has focused on the scale, timing, and component elements of the EU’s Covid-19 recovery strategy – including the proposed recovery facility, the SURE temporary unemployment reinsurance schemes, the ECB’s PEPP and CSSP programmes.
In parallel, EU financial services policymakers within the European Commission’s (EC) Directorate General for Financial Services (DG FISMA) remain focused on delivering on the planned legislative initiatives in the area of financial services.
The pandemic has of course had an impact on some of these priorities, with either timelines for legislative proposals being slightly delayed or new proposals being added into the work programme that focus on making small, yet impactful tweaks, to existing legislation. The latter includes amendments to the EU’s Prospectus Regulation to ease the prospectus requirements for issuers that have already been listed for longer period of time on EU markets as well as an easing of the requirements for convertible bonds. The EC will also propose some targeted amendments to the Markets in Financial Instruments Directive (MiFID 2) to alleviate a number of product governance requirements, encourage a wider coverage and availability of SME investment research, and reduce the scope of the commodity position limits regime. Changes to the commodity position limits regime would potentially also include a new hedging exemption for corporates who have a market facing investment firm in their group structure.
Whilst these are short-term changes that are focused on reducing some perceived burdens of the current legislative framework to support market participants on their path to recovery after the pandemic, the EC in parallel remains focused on delivering on its initial legislative priorities.
- A review of the EU Benchmarks Regulation, with the possible introduction of new mechanisms that could facilitate the transition process away from critical rates that are being discontinued (e.g. LIBOR) as well as changes to increase the ability of users – especially corporates – to continue using non-EU benchmarks after the end of 2021.
- An ambitious overhaul of the EU’s Anti-Money Laundering and Counter Terrorist Financing (CFT) rulebook with a focus on achieving maximum harmonisation of requirements across the EU to avoid divergent (and burdensome) national interpretations of the current rules.
- A new payments strategy for the EU with possible legislative action to mandate a harmonised implementation of the SEPA Instant Credit Transfer (SCT Inst.) scheme and achieving more harmonisation between national instant payment and card schemes.
- A new action plan on finalising Capital Markets Union (CMU) in the EU, including possible action on harmonising national insolvency regimes to facilitate cross-border investment and listing.
- A continued push on delivering on the EU’s Sustainable Finance Agenda, with legislative proposals to introduce an EU Green Bond Standard, requirements for supply chain due diligence for corporates, as well as harmonised ESG disclosure requirements for corporates against the metrics of the EU Sustainable Taxonomy and aligning with the disclosure requirements for investors that the Sustainable Finance Disclosure Regulation already introduced.
- A review of the EU Capital Requirements Regulation and Directive (CRR/CRD) to implement the Basel III standard for banks, possible prudential requirements for non-bank financial institutions such as asset managers, as well changes to current EU funds legislation such as the AIFMD.