The European Commission (Commission) has published its Communication on the Mid-Term Review of the Capital Markets Union (CMU) Action Plan. While the CMU remains a priority for the Commission, “a number of new challenges to financial integration have arisen which impose a need to strengthen and transform the EU’s capital markets reform agenda”, with Brexit standing out as the first example of these new challenges. 

Accordingly, the reform of the European Supervisory Authorities (ESAs) powers and governance is the first item on the agenda. The review of investment firms’ prudential treatment comes in third priority position, with a comment on the Communication that the new regime would “ensure that any relocation is not driven by regulatory arbitrage or differences in the supervisory framework”. A legislative proposal is planned for Q4 2017. Other priorities of interest include:

• measures to support secondary markets for non-performing loans;
• a potential legislative proposal in Q1 2018 to facilitate the cross-border distribution and supervision of UCITS and AIFs;
• a Communication to provide guidance on existing EU rules for the treatment of cross-border EU investments, followed by an impact assessment with a view to setting out an adequate framework for the amicable resolution of investment disputes; and
• work on sustainability and delivering the right pricing for ESG performance.

Neither a potential AIFMD review nor a potential legislative text on loan origination funds are on the published priority list.