KPMG has responded to the European Commission’s Green Paper on how Europe’s capital markets can be made more dynamic and work to better to meet the needs of investors and business seeking finance through debt and equity. We hope the rest of the industry has engaged in the process.

In a break from the ‘regulate everything’ approach following the financial crisis, the Commission is seeking views on how barriers can be removed and where incentives can be created, most crucially industry is being asked to step up and provide solutions.

The issues raised are of great importance to our firm as a leading provider of services to the capital markets including: financial services; corporate reporting and accounting; corporate governance; analysis and presentation of financial and non-financial data; and our core skills of validation, including assurance and auditing.

Our response (which can be read here) focuses on where we think most urgent action is needed, including:

• Creating an investment culture: make the regulatory framework more balanced and cohesive; differentiate consistently between types of retail investor; improve the relevance and clarity of corporate reporting.
• Enhancing market operation: create a Capital Markets Stakeholder group; develop an appropriate framework for securitisations; develop infrastructure investment further; encourage investors to provide more long-term funding.
• Unblocking savings and savers: boost the role of retail investors; support ESG investment; understand role of tax on investors and investees.
• Building the right infrastructure: share best practice on corporate governance; simplified prospectus directive; industry-led capital markets data initiative; increase cooperation between market supervisors.
• Encourage business engagement: simplified corporate reporting model; strengthened framework around credit information.

We set out tests that we consider should be applied to any detailed proposals and/or recommendations, namely: Capital markets support wider EU agenda priorities including digital and infrastructure; Enterprise finance becomes more dynamic; Make regulation clearer and more consistent; Tax systems are made more consistent, transparent and effective; Corporate governance frameworks are made more solid; and, Information is made more transparent, reliable and comparable.

We have a working group from across Europe and our response to the Green Paper is the beginning of our engagement on this topic. Capital markets union will be a significant catalyst for changing the functioning of the markets in which our clients operate. The issues involved touch many parts of our firm and we will continue to meet to debate the issues with the key institutions and our clients in the coming months.