Changes from report parliamentary committee draft to plenary report

AddedY. whereas the current largest risk-sharing instrument of the Union is the InvestEU programme; whereas most of the implementing partners remain focused mainly on the lower-risk scope of investment;

AddedZ. whereas political resistance and divergent national interests have prevented reaching consensus on the achievement of a CMU;

Building a shared vision for Europe’s productivity and the need for sustainable growth

Change 3

Changed1. Calls for a general mobilisation of all legal, administrative and financial resources and available instruments to strengthen EU security and industrial and technological sovereignty, sustainincluding enhancing the greenresilience transition,and createprotection of critical infrastructure – such as electricity, water and communication systems – to safeguard EU citizens and businesses and mitigate the impact of blackouts and other major disruptions, accelerating and investing in transitions, enhancing competitiveness, generating sustained economic growth, creating quality jobsjobs, supporting SMEs and contributecontributing to upward social convergence,convergence and cohesion, in a context of geopolitical instability and international tensions; highlights that Europe is lagging behind, and the risk of our region becoming irrelevant could arise if no further action is taken;

Change 4

Changed2. Welcomes the renewed debate on the need to restore EU productivity,competitiveness and productivity and economic growth, boosted by the Draghi and Letta reports; recalls that productivity gains could be achieved mainly through investments in innovative activities, including in the transitions; points out that competition can stimulate productivity, investment and innovation;

Change 5

Removed3. Recognises these reports as a wake-up call for European and national decision-makers, as well as a starting point for action to foster both private and public investments;

Added3. Embraces the Draghi and Letta reports as one of the numerous wake-up calls for European and national decision-makers, as well as a starting point for action to foster both private and public investments, and notably for the tech sectors in transition, the transitioning automotive sector and heavy industries such as the steel and chemicals industries; welcomes the fact that the Commission acknowledges the role of public finance in mobilising private finance and supporting innovation in the EU; points out that the lack of progress in integrating EU financial markets has often been due to reservations on the part of the Member States; calls on the Member States to make use of the existing momentum and work together with Parliament to truly advance the integration of EU financial markets; recalls that the European Union’s efforts to complete the CMU have not yielded a definitive result since 2015; encourages all parties to make efforts towards achieving a savings and investments union as soon as possible;

Removed4. Regrets the fact that many EU-based entrepreneurs feel the need to relocate to gain easier access to finance and resources; deplores that they turn to venture capital providers outside the EU and scale up in foreign markets;

Added4. Notes with concern the risks of negative shocks to economic growth and the ongoing turmoil in financial markets and geopolitical uncertainties that could threaten the prosperity of European citizens, workers and businesses in particular; notes that geopolitical uncertainties have already significantly increased financial market volatility and contributed to the weakening of the US dollar, and that security is a precondition for sustainable growth;

Removed5. Emphasises that public resources should be focused on ensuring the sustainability and accessibility of public services and infrastructure while catalysing private investment in innovative and clean industries under well-defined conditions;

Added5. Recognises that the EU’s robust regulatory framework has contributed to its financial stability; considers that this legislative stability and predictability could become a genuine comparative and competitive advantage, as these factors are critical for international investor confidence; highlights the intrinsic link between the rule of law and sustainable and competitive economic growth; highlights that the robustness of the financial sector is a key element of its competitiveness;

RemovedMobilising private investment and easing access to finance

Added6. Acknowledges the work that has taken place to build a capital markets union up to now, starting with the ‘Action Plan on Building a Capital Markets Union’ in September 2015; regrets that progress in integrating EU capital markets since then has been limited and calls for this process to be accelerated; welcomes, in this respect, the adoption of the Commission communication entitled ‘Savings and Investments Union - A Strategy to Foster Citizens’ Wealth and Economic Competitiveness in the EU’ that outlines various policy initiatives and aims to integrate EU financial markets and to channel savings into investments effectively;

Removed6. Believes that the attractiveness of EU capital markets will be increased by further integration of its internal market and the creation of economic opportunities for private investments, which would allow for higher returns; calls on the Commission and the Member States to develop solutions, whether legislative or not, to foster the creation of an EU-wide capital market that has sufficient size, liquidity, depth and transparency to attract both EU-based and international investors;

Added7. Highlights the importance of strengthening confidence in the banking system, and that ensuring financial stability and promoting an efficient single market are fundamental EU objectives; recognises that the completion of the Banking Union must be a strategic priority in deepening the Economic and Monetary Union; calls on the Council to speed up the adoption of remaining legislation to secure its financial stability framework and to finalise the Banking Union;

Removed7. Supports the integration of institutional frameworks and market structures; reiterates its demand to grant the ESMA direct supervisory powers over pan-European market infrastructures;

Added8. Insists on the urgency of taking action, speeding up decision-making, reducing implementation delays and accelerating decisions regarding EU instruments and support mechanisms;

Removed8. Urges the Commission to develop proposals to properly repatriate clearing activities to the EU;

Added9. Considers that the Union must advance with its CMU to leverage private sector investments; emphasises that it will also require public sector support to deliver the minimum annual additional investment needed to restore a sustainable and innovative industrial sector and anchor the Union’s prosperity; highlights that an increase in productivity would also generate a larger fiscal space;

Removed9. Notes that streamlining administrative procedures can improve the EU’s attractiveness as an investment destination; considers that the aligning of Member States’ legislative frameworks should be part of the simplification agenda to ease cross-border activities; calls on the Commission to rely more on regulations rather than directives, thus limiting national discretion that could lead to fragmentation;

Added10. Highlights that too much capital is not used productively in the EU; highlights that businesses, especially SMEs, are unable to take full advantage of existing capital markets in Europe for financing and investment;

Removed10. Remains committed to the objectives of the sustainable finance framework to mobilise investments in the clean transition;

Added11. Regrets the fact that many EU-based entrepreneurs feel the need to relocate to gain easier access to finance and resources; notes with concern that the lack of large-scale venture capital funds and financially viable exit possibilities in the EU propel them to scale up with foreign investments and in foreign markets; notes that this is due to the lack of an integrated CMU in the EU and to the fact that EU markets are not yet able to meet their needs; recalls that the EU generates more start-ups than the United States per year and that the return on venture capital investments is around 6 % higher in the EU than in the US, underlining the need for EU institutions to foster a more attractive and supportive environment for innovation and growth; concurs with the Draghi and Letta reports that the EU should further develop its venture capital markets, and consequently stresses the importance of developing a strong ecosystem for venture capital and investment in the EU and calls for the formation of venture and risk capital for companies to obtain investment in our markets, such as sufficiently large European growth and buyout funds; highlights that public support to venture capital markets should prioritise projects aligned with EU priorities;

Removed11. Believes that innovative companies could benefit from a single set of EU-wide rules; recalls in that regard the ‘Business in Europe: framework for income taxation’ proposal establishing a single set of rules to calculate companies’ corporate tax bases;

Added12. Highlights that European financial markets need to be attractive and easy to access for both issuers and investors; underlines that this applies to both primary and secondary markets; highlights that the decision to list on a regulated market often comes with additional requirements for companies, also to protect investors; notes that such requirements can be perceived as a disadvantage of going public; calls on the Commission to continuously monitor and reduce the administrative and compliance costs for publicly listed companies, in particular for small and medium companies; welcomes the recently adopted Listing Act as a first step in this regard, making it easier for companies of all sizes, including SMEs, to list on European stock exchanges; calls for a pragmatic implementation of the Listing Act and calls on the Commission to further build on this initiative, in particular as regards equity research for SMEs and by strengthening SME growth markets, which have helped smaller companies to go public;

Removed12. Calls on the Commission to develop proposals aimed at creating instruments to facilitate the channelling of household savings to productive investments; asks the Commission to explore the idea of creating an EU investment savings account or a label at EU level for simple investment products suitable for retail investors based on common criteria or features such as product simplicity, low costs, asset allocation and risk mitigation techniques; asks in particular for the Commission to assess the efficiency of a label for investments that are sustainable and located in the EU;

Added13. Stresses that public investment plays a crucial role in complementing private investment; urges the Commission to issue proposals that will aim at mobilising additional capital to also support the objectives set out in Article 3 of the Treaty on European Union (TEU); believes that financial instruments and budgetary guarantees represent an efficient use of resources to advance key EU policy objectives; reiterates that well-designed budgetary guarantees and financial instruments, when based on market needs, are a highly efficient use of limited EU budgetary resources to de-risk investment and crowd in private capital;

Removed13. Expects the Commission to encourage growing start-ups and companies to scale up and list within the EU; asks, therefore, for the future EU Start-Up and Scale-Up Strategy to include a chapter on finance aimed at preventing their relocation to non-EU countries;

Added14. Emphasises that public resources should be focused on ensuring the quality, efficiency, sustainability and accessibility of public services and infrastructure, especially those related to services of general interest, while catalysing private investment in innovative and clean technologies and industries under well-defined conditions;

Removed14. Calls on the Commission to prioritise a CMU agenda that sustains financial stability, favours access to venture capital and equity investment and reduces over-reliance on bank lending;

Added15. Emphasises that closing the investment gap is not solely a matter of mobilising large financial volumes, but of ensuring that the EU is equipped to channel funds into productive investments; underlines that institutional capacity, regulatory clarity and project quality are critical to the effective use of public and private capital; notes, in this respect, that, on account of a number of factors, including limited access to a broader market portfolio, product quality and fees, many EU products do not offer sufficient returns;

RemovedSustaining public investments to close the productivity gap

Added16. Recalls that productivity gains could be achieved mainly through investments in innovative activities; recalls that the target of investing 3 % of GDP in research and innovation is still far from being achieved; calls on the Commission and the Member States to ensure sufficient financing and tools to achieve that target;

Removed15. Believes that the urgency of measures on defence and decarbonisation means that substantial public support will be required to mobilise private investment;

Added17. Regrets that the low level of financial education in many Member States represents a significant challenge to citizens’ economic autonomy and to the development of a strong and competitive economy; recalls that poor financial education hinders the population’s ability to make informed decisions about saving, investing and retirement planning; affirms that this gap in financial education hinders the development of an investment culture that is crucial for economic growth; underlines the importance of an ambitious, measurable and determined EU strategy to promote financial literacy in Europe, empowering citizens to better protect and mobilise their savings and to build on a more attractive capital market;

Removed16. Fears that public investment will plunge after 2026, when the Recovery and Resilience Facility is set to expire;

AddedMobilising private investment and easing access to finance by developing a savings and investments union

Removed17. Recalls that safe assets have been issued at EU level by European issuers such as the European Investment Bank, the European Financial Stability Facility, the European Stability Mechanism and, since 1976, the European Economic Community and then the EU itself; recalls that the NextGenerationEU recovery fund is the largest stimulus package ever funded by the EU to support economic recovery and the green and digital transitions;

Added18. Welcome the self-imposed goal by the Commission to be an ‘investment Commission’ and unlock the financing needed for the green, digital and social transitions, to maximise synergies between public and private investment, and to leverage and de-risk private capital;

Removed18. Shares the assessment that issuing a common safe asset to be used as a strong benchmark would significantly facilitate the achievement of the CMU and address the investment needs identified in the Draghi report; recommends that the Commission assess the features of safe assets issued at EU level and publish a report to inform the future design of an EU safe asset;

Added19. Believes that the attractiveness of EU capital markets will be increased by further integration of the EU internal market in a way that fosters competition among EU companies, the creation of economic opportunities for private investments and simplification, allowing higher returns for citizens and companies; underscores that returns are, however, undermined by the high costs associated with investments in European financial markets; calls on the Commission and the Member States to develop solutions, whether legislative or otherwise, to foster the creation of an integrated EU-wide capital market that has sufficient size, liquidity, depth and transparency to attract both EU-based and international investors while ensuring consumer protection and safeguarding financial stability; recalls that the prospect of higher investment returns is a key incentive for retail investor participation in capital markets; stresses, in this regard, that the CMU will not be possible without completing the Banking Union;

Removed19. Believes that heightened defence needs due to geopolitical tensions require immediate mobilisation of financial support; welcomes the Commission’s upcoming proposal for a new financial instrument of up to EUR 150 billion to boost EU defence capabilities as part of the ReArm Europe plan; calls on the Commission and the Member States to also set up a dedicated instrument under the European Stability Mechanism;

Added20. Notes that European capital markets currently remain highly fragmented, with European investment funds remaining nearly seven times smaller than US funds; considers that this harms the competitiveness of the EU investment fund sector vis-à-vis global competitors, as fund size is a key factor influencing the costs charged to end-investors; believes that a more integrated cross-border fund market in the EU could lead to increased fund sizes over time and to efficiency gains that, if passed on to retail investors, could help to lower costs and deliver better value for money for end-investors;

Removed20. Encourages the European Investment Bank Group to adapt its lending policy to provide greater support to higher risk investments, mostly in innovative companies and projects fostering the green transition;

Added21. Believes that the CMU will benefit consumers and SMEs by offering high-yield investment opportunities in the real economy and eventually boost the venture capital market by improving access to diversified funding sources; believes that financing European scale-ups with European capital should be a priority, as exemplified by the European Tech Champions Initiative launched in February 2023 to finance promising European tech companies;

Removed21. Calls on the Commission to establish an economic intelligence unit to identify European industrial needs, shortages and market opportunities and to produce recommendations, including on financing, to address these challenges from an EU perspective;

Added22. Considers that venture capital should become more widely accessible to companies as an alternative to traditional bank lending in order to diversify funding sources; calls on the Commission to propose measures to enhance this type of financing for EU companies;

Added23. Points out that the size, depth and liquidity of capital markets vary greatly from Member State to Member State, with some Member States having been significantly more successful in providing attractive primary and secondary markets for businesses and inducing citizens to invest in those markets; calls on the Commission to identify best practices and integrate them into the savings and investments union workstream;

Added24. Considers that private capital will be instrumental in closing the investment gap identified by the Draghi report in the most efficient manner;

Added25. Supports the integration of institutional frameworks and market structures; reiterates its call to foster the process of supervisory convergence led by ESMA, including by granting ESMA direct supervisory powers where this brings European added value – for example, over pan-European market infrastructures – in order to enhance the competitiveness of European listing markets and improve the efficiency of the supervisory landscape and collaboration with the national competent authorities (NCAs); recalls that ESMA already has direct supervisory powers over several financial entities, such as credit rating agencies, trade repositories and Tier 2 Central Counterparties located outside the EU;

Added26. Recognises also that harmonised supervision does not always require a single supervisor but can also be achieved through the convergence of national supervisory practices, where this is more appropriate; supports, therefore, the Commission’s intention to propose measures to strengthen supervisory convergence tools and make them more effective, and to achieve more unified direct supervision of capital markets by transferring certain tasks to the EU level;

Added27. Points out that any increase in the powers of the European supervisory authorities (ESAs) should go hand in hand with a commensurate increase in the level of the ESAs’ accountability; considers that the governance of ESMA should be revised to guarantee the efficiency and independence of ESMA’s decisions; supports the proposal in the Draghi report to grant ESMA a more European governance structure and to establish strong cooperation with national supervisory authorities, drawing on the model of the Single Supervisory Mechanism or the Authority for Anti-Money Laundering and Countering the Financing of Terrorism (AMLA);

Added28. Considers that the ESAs should be adequately funded in order to be able to carry out their duties, including by involving financial institutions and financial market participants from supervised firms;

Added29. Stresses the importance of a strong role for the European Central Bank (ECB) in overseeing systemically important market infrastructures, in line with its responsibilities under the Treaty on the Functioning of the European Union (TFEU) and the SIPS Regulation; believes that the ECB should actively contribute to enhancing the interoperability, resilience and integration of EU-wide trading and post-trading systems, particularly through its oversight of platforms such as TARGET2-Securities;

Added30. Stresses that the administrative burden and compliance costs that occur in a cross-border context could already be addressed through better coordination and cooperation among national supervisory authorities, e.g. in the area of data sharing; calls on the Commission and the ESAs to move towards a ‘report only once’ regime; considers the European Single Access Point to be an important initiative in this regard and calls for its timely implementation; suggests that ESMA could also become a central data hub, centralising the reporting of entities subject to reporting requirements under MiFiR and EMIR;

Added31. Urges the Commission to develop proposals to support the relocation of clearing activities to the EU; regrets the current situation, in which the bulk of the EU clearing business is conducted outside of the EU; looks forward to an ambitious delegated act on active accounts under EMIR 3.0; invites the European Commission to continuously assess the development of clearing activities and the impact of the regulation, and to put forward further legislative proposals to strengthen the EU’s clearing ecosystem;

Added32. Welcomes the Commission’s announcement of an ambitious package of legislative proposals to strengthen the trading and post-trading ecosystem in the European Union, remove barriers to cross-border activity and make the framework fit for new technologies; expects that such a proposal could help address market fragmentation in the EU; stresses, however, that most initiatives towards market consolidation should be market-driven;

Added33. Recognises the need for efficient and liquid capital markets to boost investments, including a competitive post-trading market infrastructure; welcomes the Commission’s legislative proposal to introduce a targeted amendment to the Central Securities Depository Regulation (CSDR) with the aim of shortening the settlement cycle in the EU from two days (‘T+2’) to one (‘T+1’) for transactions in transferable securities executed on trading venues; points out that this initiative allows the EU to catch up with other jurisdictions that have already completed the move to T+1 and avoids misalignment; expects that the proposal will increase the efficiency and resilience of EU capital markets, including through lower risks of settlement fails, quicker availability of securities and funds and lower margin requirements; notes with concern that other jurisdictions, such as the United States and India, are exploring or piloting T+0 settlement cycles; calls on the Commission to urgently initiate a technical and regulatory assessment of the feasibility of moving to T+0 settlement, in close coordination with market infrastructures, central banks and market participants; highlights that further shortening the settlement cycle would reduce systemic risk, enhance market efficiency and strengthen the attractiveness of EU capital markets globally;

Added34. Notes that streamlining administrative procedures can improve the EU’s attractiveness as an investment destination; considers that aligning Member States’ legislative frameworks, while preserving national competences and minimum standards, should be part of the simplification agenda to ease cross-border activities; recalls that relying on regulations rather than directives would reduce divergences in the implementation of EU legislation, including gold plating, and thereby support the ongoing simplification exercise; calls on the Commission to apply the Better Regulation principle, guaranteeing harmonisation where impact assessments indicate a clear added value and tackling fragmentation; underlines the possible gains from streamlining the EU Sustainable Finance Framework, as highlighted in the Draghi report, particularly through enhanced clarity, consistency and guidance; notes, in this regard, the Commission’s Sustainability Omnibus Package;

Added35. Considers that the first step towards simplification consists in efficient legislation; calls on the Commission to ensure the involvement of the ESAs in the decision-making process for Level 2 and Level 3 mandates to guarantee that these mandates are evidence-based, proportionate and tailored to the needs of the financial sector; invites the Commission and the ESAs to also evaluate how to reduce the number and complexity of upcoming delegated acts, implementing acts, Q&As and guidelines; stresses that the ESAs should strictly adhere to the mandate provided by the European legislator;