EU readies subsequent steps to spice up its capital market By Reuters

By Huw Jones

LONDON (Reuters) – The European Union will suggest guidelines subsequent month to make it simpler for firms to checklist, give collectors extra predictability on firm bankruptcies, and to draw extra euro derivatives clearing from London, the bloc’s monetary providers chief stated on Thursday.

Mairead McGuinness stated there had been good progress in constructing the EU’s capital markets union (CMU) however extra wanted to be accomplished to ease reliance on banks for funding firms and the economic system, and on London post-Brexit for clearing euro denominated swaps.

“We’re nonetheless over-reliant on central counterparties outdoors the European Union and that is additionally a matter of monetary stability,” McGuinness advised an occasion held by the Affiliation for Monetary Markets in Europe (AFME).

“Within the unlikely case of one thing going mistaken, we might not be within the driving seat for selections, so we need to improve the attractiveness of clearing within the EU,” she stated.

McGuinness stated subsequent yr she would suggest streamlining the system of withholding tax on investments that traders have outdoors their house state within the bloc.

The EU is watching intently steps being taken by Britain to bolster the competitiveness of its monetary sector, now largely minimize off from the bloc.

“When the UK had been a part of the European Union we had a really robust monetary centre, however that has modified and the main target of our work is altering due to that,” McGuinness stated.

“We realise that for the scale of our economic system the capital markets do not replicate that, as we rely very closely on financial institution finance and that’s not acceptable.”

AFME was publishing a report on progress with the CMU, which confirmed Europe is falling additional behind the US by way of constructing a deep pool of capital for traders, regardless of many legislative measures within the EU in recent times.

“It’s nonetheless early days for CMU. The CMU won’t be constructed in a single day,” McGuinness stated.