Capital Markets Recovery Package: Council agrees its position

EU Capital Markets Recovery Package includes amendments to the EU Capital Markets rules to support: EU companies raising capital in public markets; lending capacity of banks; and boost investment in the real economy. European Commission President Ursula von der Leyen has moved the package forward as a key priority dossier in the European Council.

Key Regulatory Frameworks:

• Markets in Financial Instruments Directive (MiFID) II: Commodities Derivatives Market: proposed amendments to simply information requirements and need of the commodities derivatives market
• The Prospectus Regulation
• Securitization Framework: Securitization Regulation and the Capital Requirements Directive 
• Paper-based info: Phase of paper-based information
• Plain vanilla bond governance exemptions: Exemption for non-complex (“plain vanilla”) bonds sold to both retail and professional investors from certain product governance-related information requirements under certain conditions
• Euro-denominated derivatives: supporting growth of this market
• EU Recovery Prospectus
• Shorter Prospectus: for companies with a track record in the public market to disclose information to investors when they issue bonds or shares
• Transparency Directive
• ESEF: Option to postpone, by one year, the requirement for listed companies to prepare all annual financial reports in a European Single Electronic reporting Format (‘ESEF’) for financial years beginning on or after 1 January 2020.
• EU Securtitisation Framework: Capital Markets Recovery Package includes proposed amendments to the existing EU Framework
• STS: Simple Transparent Standardized
• Synthetic: Credit Risk Transfer tools for banks. Increases overall private risk-sharing.
• NPE: Securtitisation of Non-Performing Exposures. Obstacles are removed to support banks offloading NPEs.
• SES: Synthetic Excess Spread: Credit enhancement tool common in synthetic securitizations. Council suggest complementing the Commission’s proposal with dedicated prudential treatment and regulatory capital requirements for SES.