The European Commission has published a report on the future of European competitiveness, prepared by Mario Draghi, former President of the European Central Bank. The report aims to set out a new industrial strategy for Europe to overcome barriers to the EU's competitive strength. It sets out priority proposals in the short and medium term in key strategic sectors. For financial regulation, the report focuses on the completion of the Capital Markets Union and the Banking Union.
The report's recommendations include:
- introducing a European Security Exchange Commission. ESMA should transition into the single common regulator for all EU security markets, with exclusive supervisory powers over large multinational issuers, major regulated markets with trading platforms in various jurisdictions and central counterparties;
- creating a pan-European multi-located stock market by reducing regulatory complexity for initial public offerings and for companies going public, harmonising the rules across EU markets and aligning the rules with non-EU markets. Dual-class shares should be allowed;
- creating a single CCP and a single central securities depository for all security trades;
- assessing whether further changes to the Solvency II capital requirements are warranted by further reducing the capital charges on equity investments held for the long term;
- reforming existing securitisation regulation. In particular, the European Commission should adopt a legislative proposal to adjust prudential requirements for securitised assets. The report also recommends establishing a securitisation platform to deepen the securitisation market;
- creating a separate jurisdiction for European banks with substantial cross-border operations that would be "country blind" from the regulatory, supervisory and crisis management viewpoints. There should be a separate deposit insurance system for these groups, contributed by the groups themselves.
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