IRSG responds to the Commission’s Action Plan on ‘Building a CMU’

The International Regulatory Strategy Group (IRSG) - a body jointly sponsored by TheCityUK and The City of London Corporation - has strongly supported the creation of a Single Market for capital since the Commission first announced the initiative in the summer of 2014. The IRSG has today written to Commissioner Hill in response to the Commission’s Action Plan on ‘Building a Capital Markets Union’ which was published on 30 September 2015.

The IRSG’s letter highlights specific areas for comment as the Commission embarks on realising the Action Plan. These include:

  • Third country access; The IRSG is concerned to see that there is not greater attention paid to third country issues in the Action Plan. For international businesses operating within the EU, it is vital that a CMU not only addresses barriers to a Single Market for capital within the EU, but also recognises the international nature of capital markets.
  • The cumulative impact of regulation; With many of the legislative proposals still to enter into force, it will be much more difficult to assess fully the cumulative impact of regulation on the industry. We therefore support the idea of ongoing assessment of the impact of the changes that have been made.
  • Re-calibration of Solvency II Capital Requirements; The Commission and/or EIOPA could seek to use the amendments made in relation to the standard model, to encourage NCAs to be more flexible in the application of the rules for companies applying an internal model.
  • The revision of the Prospectus Directive (PD); The revision of the PD will be important to facilitate quicker and cheaper access to the markets and to encourage a wider array of investors to participate in the IPO process.
  • Insolvency; We support the inclusion of insolvency in the Commission’s work programme for 2016 as an important step and we would encourage the Commission to prioritise this issue.
  • Enforcement of EU legislation; We welcome the increased focus on enforcement as a way of realising a Single Market for capital.