VIDEO | A recent AFME report said there is no discernible progress, yet the EU’s Capital Markets Union ambition (CMU) stays alive. According to ABN AMRO’s Erik Veerman, on stage with PostTrade 360° Amsterdam, it is – despite its challenges – too important to ignore.
Compared with the US, the European capital market is doing poorly, with price-to-earnings ratios way lower, low levels of market-based financing in the SME areas, and relatively poor interest in retail investments among people in general. Plus, financial markets are fragmented on all levels: trading, infrastructures and regulation. Is there any light in the tunnel?
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Well, at least a path is proposed. The EU’s Capital Markets Union initiative aims to address the pain ponts. 16 action plans are organised along three pillars: small and medium-sized enterprises should be able to get more market-based financing (as different from bank loans and private investment), retail investors should hold more assets in the market, and the market should be integrated into being a single one.
After a hesitant start, the CMU “flagship project” is gaining momentum with key legalisations in place – with SRD2, CSDR, a review of the Listing Act, and the Retail Investor Strategy as essential building blocks.
Erik Veerman is Senior Advisor Market Infrastructures, ABN AMRO.
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