Brexit strengthens will for greater banking and capital markets union in the EU: CFA Institute Capital Markets Conference, European Parliament, Brussels

CFA Institute, the global association of investment professionals, brought together leading EU policymakers, national regulators, senior academics and industry participants at the European Parliament on Wednesday, to examine whether now is the right time to seek greater harmonisation of financial regulation and supervision at the European level.

Ten years since the global financial crisis, key concerns about EU financial regulation and supervision persist, with regulatory overlap, duplications and inconsistencies still present. Yet Brexit, the fast-moving nature of FinTech, the sustainable finance initiative and the review of the Supervisory Authorities are all potential drivers for deeper capital markets integration. Barriers to retail financial services also prevail.

Following the conference, Josina Kamerling, Head of Regulatory Outreach for CFA Institute in EMEA commented:

“Investors and citizens want to see something positive come out of Europe. There is growing demand that finance should work for the greater good of society and that it should operate in partnership with the broader environment. Policymakers and regulators in Brussels are ambitious for consistent action that can support the sustainability agenda and the question of capital markets union is integral.

“For the policymakers and regulators at the capital markets union debate, Brexit has strengthened the will for capital markets and banking union within the EU. Yet despite this uniformity of approach, we are not hearing any wish to replicate the City of London somewhere within the EU. Rather, there is concern to recognise that how the UK and the EU-27 conduct financial services after Brexit will change.

“Brexit will have consequences for how financial services are traded between the EU and the UK and these added complexities are focusing policymaking towards greater integration of the remaining EU-27. A major challenge for those countries will be to ensure appropriate arrangements for managing financial risk at the micro and macro level are in place, and that there is greater self-reliance in accessing capital. In tandem, the policymakers are looking to help develop the capital markets of smaller neighbouring nations with a view to their eventual integration.

“The challenges, however, are significant. While a move toward greater integration is present, there is also an audible call for support from national governments in Europe, civil society and the private sector to commit to working together and going beyond the 2015 Action Plan. In the meantime, how the European capital markets function going forward without an integrated UK is going to require very careful navigation.“

Speakers at the capital markets union conference were:

• Jacques de Larosière, Chair, 2009 High Level Group on Financial Supervision in the EU
• John C. Berrigan, Deputy Director-General for Financial Stability, Financial Services and Capital Markets Union at the European Commission
• Steven Maijoor, Chair of the European Securities and Markets Authority (ESMA)
• Esther Wandel, Head of the Investment Funds Unit, Federal Ministry of Finance, Germany
• Carmine Di Noia, Commissioner CONSOB, Italian Financial Markets Authority
• Sirpa Pietikäinen, MEP
• Wolf Klinz, MEP
• Guillaume Prache, Managing Director of Better Finance
• Peter De Proft, Director General, EFAMA
• Daniel Dăianu, Member of the Board, National Central Bank of Romania