Steven Maijoor, Chair of the European Securities and Markets Authority (ESMA), delivered a keynote speech at the Luxembourg Stock Exchange Day this evening on the topic of Capital Markets Union.
Selected extracts from the speech:
"I am delighted to speak today at this important event of the Luxembourgish financial sector. It provides an excellent background to talk about the priorities of the Capital Markets Union or CMU. Over the past decades Luxembourg has successfully developed its non-banking sector and the stock exchange is a key part of that success. Also, it is very timely to speak about the development of capital markets considering this week’s deadline for the consultation on the Commission’s CMU Green Paper. Hence, in my contribution I can give you some first indications of ESMA’s reaction to the consultation. But before I continue on the topic of CMU, let me first take a step back."
"Europe’s current biggest challenge is the quest for economic growth to ensure our welfare and to maintain our position in the global economy. We need to meet this challenge against a background where all across Europe, the European Union (EU) is rather seen as part of the problem than part of the solution. Therefore, our measures need, more than ever, to be concrete and practicable, encompass the entire membership of the Union and contribute to economic growth. The development of the CMU is of strategic importance in that respect."
"Europe needs to develop alternative funding channels to ensure that the benefits of capital markets and non-banking institutions are maximised for the real economy. Therefore, the European Commission – rightly, in my opinion – launched the initiative to establish a CMU, building further on the EU’s longstanding tradition of integrating the capital markets of its 28 Member States."
"A successful capital market requires active participation by investors, including retail investors. The frequently used example of a better balance between bank funding and markets funding is the United States of America (USA). Just to share a statistic with you: participation of households in US securities markets has strongly increased in the past 30 years from about 45% to about 65% of all households. While there are national differences, participation of EU households in securities markets is typically much lower. For example, the average direct financial holdings of European households in securities markets only amounts to about 20%. To put it bluntly, Europeans prefer to keep their savings in deposits. However, this preference can be expected to change as households will more often have to take care of their own pension arrangements."
"Let me now move towards the last, but by no means least important, part of my intervention today. This is an area in which the three European Supervisory Authorities can play an important role and which is one of ESMA’s key strategic objectives for the years ahead: supervisory convergence.
Giving the breadth and complexity of the single rulebook, regulators need to make many choices regarding their supervision, including the interpretation of the rules and the intensity of supervision. Diversity in these choices will have the result that the single rulebook will not in fact be seen as such by investors and market participants. This is not an academic debate or power game between regulators but has important practical implications. Any investor or company that has been active in different countries will without doubt underline the importance of applying, supervising and enforcing basic technical rules consistently."
