EU Steering Committee Meeting

By Phoebe Chan

Late September in Copenhagen, the CFA Institute EU Steering Committee met to reflect on the future of Europe’s financial system. For the committee, composed of CFA society advocacy leads from across Europe, the timing could hardly have been more apt. The continent is once again grappling with a familiar question: How can Europe build a deep and integrated capital market?

Since our meeting, the European Commission launched a number of initiatives on retail savings and investment, on pensions, and on the integration of national capital markets, which would also entail a more significant role for the European Securities and Markets Authority (ESMA). These proposals, and calls for supporting action by EU states, are part of a broader initiative to establish an EU-wide Savings and Investments Union. This new EU’s strategy rightly focuses on engaging a broader segment of EU households in capital market investing, thereby making the benefits of long-term investing more widely shared.

The EU agenda aimed at integrating the bloc’s capital markets has been evolving for at least ten years. The benefits in terms of financing conditions for enterprises and retail investor participation often seem elusive.

Experts and market participants from within the Danish financial industry provided much valuable input to our discussions. Denmark is a country with relatively well-developed local asset pools and wide engagement by savers in capital markets. Understandably, there is some scepticism about the centralization of financial market supervision at EU level. Local market participants also showed some concern over complex EU financial sector rules, and over the declining role of local equity markets in financing small and medium-sized enterprises (SMEs). Staying private has become a more viable option for local companies and startups.

The Role of the European CFA societies and of CFA Institute

Based on the September meeting, EU Steering Committee now has a clear agenda in support of EU policies aimed at a deeper and more integrated capital market. Working closely with the EU Steering Committee, CFA Institute staff will continue to monitor developments and foster constructive dialogue across the European policy and professional communities. Private markets and the openness of the EU capital market are two initial priorities for research and debate.

Europe now faces a choice: to keep managing fragmentation, as it has for decades, or to finally deliver the single market for capital it first promised in 2015. This time, the stakes are higher: innovation, competitiveness, and Europe’s strategic autonomy all depend on the outcome.