European Commission adopts Capital Market Recovery Package

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European Commission adopts Capital Market Recovery Package

27 July 2020

Regulatory News Alert

Context and objectives

On 24 July 2020, the European Commission adopted a Capital Markets Recovery Package (“the Package”) to help capital markets support businesses to recover from the COVID-19 pandemic.

The Package includes adjustments to the Prospectus Regulation, the revised Markets in Financial Instruments Directive (MiFID II) and the Securitization Regulation, and introduces changes to capital market rules to boost economic investments. These targeted amendments are part of the European Union's COVID-19 recovery fund and would preempt changes foreseen under the MiFID review agenda and the capital markets union (CMU).

 

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Amendments to MiFID II (2014/65/EU)

The proposed changes to MiFID II would contribute to Europe’s recovery by facilitating investments in the real economy and freeing up resources for both firms and investors. The following elements are targeted:

  • Disclosure and information requirements for transactions between professionals will be streamlined;
  • Complex requirements that have hindered the prompt execution of investment decisions will be simplified;
  • The coverage of small- and medium-sized enterprises (SME) by research analysts will be improved; and
  • Nascent euro-denominated energy markets will be promoted.

Amendments to the Prospectus Regulation (EU) (No 2017/1129)

The Commission wishes to create an “EU Recovery Prospectus”, a type of short-form prospectus for companies with a track record in the public market. The aim is to facilitate the recapitalization of companies affected by the economic shock of the COVID-19 pandemic. This new short-form prospectus should be easy to produce by issuers, easy to read by investors, and easy to scrutinize by national competent authorities. These alleviated prospectus rules should help companies issue capital more easily, thereby reducing their debt-to-equity ratios and helping them stay solvent.

The second set of targeted amendments to the Prospectus Regulation is aimed at facilitating fundraising by banks that play an essential role in financing the recovery of the real economy.

Amendments to the Securitization Regulation (EU) (No 2017/2402)

The proposed changes would increase banks' capacity to provide loans to households and companies by extending the simple, transparent and standardized securitization to on-balance sheet securitization, which is mostly used for corporate loans (SME loans in particular), and by facilitating the securitization of nonperforming loans.

Next steps

The European Parliament and the Council still need to reach a final agreement on these legislative texts. After the package is adopted and has entered into force, the changes to the Prospectus Regulation and the Securitization Regulation will directly apply to all Member States. The MiFID amendments will need to be transposed into national laws before they can apply, but the objective is to fast-track the process.

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Contacts

Subject matter specialists

Xavier Zaegel
Partner – Consulting IM & PERE Leader
Tel : +352 45145 2748
xzaegel@deloitte.lu

Pascal Martino
Partner – Banking Leader
Tel: +352 45145 2119
pamartino@deloitte.lu

Pascal Eber
Partner – Consulting Banking,
Insurance and non-FSI Leader
Tel : +352 45145 2649
peber@deloitte.lu

Laurent Collet
Partner – Consulting Banking, Insurance and non-FSI
Tel : +352 45145 2112
lacollet@deloitte.lu


Regulatory Watch Kaleidoscope service

Simon Ramos
Partner – IM Advisory & Consulting
Leader
Tel : +352 45145 2702
siramos@deloitte.lu

Jean-Philippe Peters
Partner – Risk Advisory
Tel : +352 45145 2276
jppeters@deloitte.lu

Benoit Sauvage
Director – Risk Advisory
Tel : +352 45145 4220
bsauvage@deloitte.lu

Marijana Vuksic
Manager – Risk Advisory
Tel : +352 45145 2311
mvuksic@deloitte.lu

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