On 18 February 2015, the European Commission published a green paper on building a Capital Markets Union, alongside two complementary consultation papers on a revised EU framework for securitisation and a review of the Prospectus Directive. The proposals are part of an initiative to develop a more integrated single market for raising capital across the EU. The proposals in the green paper are in outline form because the ideas for creating the Capital Markets Union remain at an early stage of development. However, with an action plan due to be published later in 2015, they provide insight into the early ideas of the Commission. In this note, we explore the main changes proposed.

Introduction -

The green paper consults on the establishment of a Capital Markets Union (the “CMU”), the development of which is considered necessary by the Commission to lower the costs of funding within the EU and increase sources of funding for businesses by ensuring the capital markets fulfill a greater role in channeling finance to the economy. The paper identifies five priority areas for early action: (i) reducing barriers that prevent access to capital markets; (ii) widening the potential investor base for small and medium-sized enterprises; (iii) building a sustainable securitisation market; (iv) boosting long-term investment; and (v) developing a more harmonised European private placement market. The Commission is seeking to “create a single market for capital for all 28 member states by removing barriers to cross-border investment within the EU and fostering stronger connections with global capital markets.”