ESMA’s recommendations for a well-functioning capital market focus on three dimensions: citizens, companies and the EU regulatory and supervisory framework. The actions proposed in this paper go beyond changes to financial regulation and are thus directed not only to capital market supervisors but also to EU Member States, the European Commission and EU Co-legislators as well as to the financial industry.

Verena Ross, ESMA Chair, said: 

“Creating effective and attractive EU capital markets requires improving the wider market ecosystem and putting investors and companies at the heart of it. Steps are needed to ensure capital markets can play their role in supporting the financing needs of Europe. Therefore, ESMA today puts forward proposals for how markets can serve the needs of European citizens and businesses.”

Taking into account the current state of the capital markets and leveraging on our expertise and engagement with stakeholders, we have built this comprehensive set of recommendations. As we publish our position paper, I would also like to thank the members of ESMA’s Board of Supervisors for their ideas, suggestions and support, which allows us to bring the voice of securities regulators to the debate.”

Key proposals

• EU citizens: Simple, cost-efficient investment options are crucial for empowering citizens to invest their savings in capital markets that serve their long-term needs. Key recommendations in this area include the development of basic long-term investment products and pension systems that are suitably incentivised and contribute to the development of capital markets. This should be complemented by efforts to improve financial education.
• EU companies: Diverse and sustainable financing options are critical for fuelling growth and innovation in the EU, especially for SMEs. Key recommendations in this area include developing a conducive ecosystem for public companies and fostering pan-European markets while addressing barriers to integration, particularly for market infrastructures.
• EU regulation and supervision: EU capital markets must be agile to respond to evolving needs. Key recommendations to address this include modernisation of the EU’s regulatory framework, to account for new tools such as effective forbearance powers. At the same time, supervisory consistency amongst EU supervisors should be prioritised, while further centralisation of supervision at EU level should be evaluated.