Recommendations on the Market Integration and Supervision Package (MISP)
Better Europe and WWF welcome the European Commission’s proposals for more centralised supervision of EU capital markets as a remedy to the fragmentation that limits their full potential. We believe it is essential to build on this ambition and move towards a single supervisor for EU capital markets, rather than weaken the powers of the new ESMA Executive Board including with regard to direct supervision as some Member States propose. Otherwise, both legal certainty and efficient decision-making will be at risk.
As a remedy to another dimension of market fragmentation, we also welcome the Commission’s proposal to enhance pre-trade transparency through equity and ETF consolidated tape (CT) and to improve venue identification in post-trade reports. These measures would reduce information asymmetries between large and small market participants and help climate-transition-oriented investors make informed decisions. In this respect, we believe that the MISP should go further (more details in point 4 below).
Nonetheless, efficient capital markets cannot be an end in themselves; they are a means that should serve the EU’s broader policy objectives, including strengthening Europe’s strategic autonomy, energy independence, and economic resilience in an increasingly unstable world. Connecting the capital markets with these purposes is important for several types of investors. The Commission proposes to mobilise additional savings through capital markets but does not address the benchmarks and market structures that influence where those savings are ultimately invested in.
Succeeding in one of the EU’s strategic priorities, decarbonisation and the green transition, is not only essential to securing a liveable future for people and the planet, but also a prerequisite for Europe’s long-term geopolitical resilience and competitiveness. Failure to accelerate the deployment of renewable energy, clean technologies and sustainable infrastructure would deepen Europe’s dependence on imported fossil fuels and strategic technologies. Conversely, a successful green transition would enhance energy security, reduce external vulnerabilities and strengthen the EU’s capacity to act autonomously and protect its citizens in a rapidly evolving geopolitical landscape.
The EU continues to generate large savings surpluses, but a very significant share of those savings is invested outside the Union rather than financing productive investment, innovation and the green transition within Europe. Moreover, the increasing concentration of asset management and the growing role of a small number of US-based asset managers raise questions regarding the exercise of shareholder rights, corporate governance and stewardship in European listed companies, including their influence on the formulation of ESG policies and other strategic corporate decisions.
We therefore believe that the following four dimensions should be added to, or reinforced within, the MISP:
1. Integration of climate-related financial risks in the prudential framework;
2. Incentives towards sustainability and away of harmful activities;
3. European savings and European decision-making for investment in Europe;
4. Improve market data availability to empower sustainable investors.
For more information, see the full position paper.