Mr. Gavin Purtill:

We are grateful for the kind invitation to the Banking & Payments Federation Ireland, BPFI, to appear before the committee today and to make a submission on its review of the recently published Green Paper on capital markets union. BPFI is the voice of banking and payments in Ireland with over 70 members, including 35 international banks, which are represented by our affiliate organisation, the Federation of International Banks in Ireland, FIBI.

Our submission document includes some background information on capital markets union, CMU. In the interests of time I would like to outline briefly what BPFI sees as the eight priorities for CMU at this initial stage. First, CMU should enhance existing markets. Policy makers need to avoid introducing measures that are likely to have negative impact on capital flows and investment.

Second, the Commission must ensure a level playing field between markets and EU and non-EU actors. To ensure an effective Single Market, it is necessary to align regulations so that they do not act to prevent cross-border activities or distort competition. So-called shadow banking activities should not benefit from less onerous or even preferential regulatory treatment and should be subject to the principle of same risk, same rules.

Third, the single rulebook must be completed by close convergence of supervisory practices that must be effectively and consistently enforced across all member states. Member states should not be competing on legislation but instead competing on business-friendly environments to attract investment.

Fourth, the CMU should emphasise the importance of liquidity and market making. Liquid capital markets will boost the process of moving capital from slow-growing sectors to dynamic innovative industries and raise the confidence of investors.

Fifth, efficiencies in cross-border investments should be delivered with the removal of existing tax barriers. Several tax barriers have been identified which impact negatively on cross-border investments, such as the complexity and cost of obtaining the tax relief. We would like these to be addressed under CMU to promote cross-border activity.

Sixth is the improvement of financial education. The Commission should take steps to improve the level of financial education in the EU, for both retail investors and SMEs. This would help retail investors to better understand the functioning of capital markets and their role within markets, while SMEs would benefit from increased knowledge of possible funding options available within capital markets.

Seventh – our last two priorities are shared with the Commission as seen by their consultations on the prospectus directive and on securitisation – we would like to ease the burden on firms going to market and to see a review of the prospectus directive. The threshold for producing the prospectus should be significantly higher to ease the burden on SMEs. A revised prospectus directive should make it easier and cheaper for firms to go to market, while still preserving a high level of investor protection.

Finally, we would like to restore the economics of and revise the rules for securitisation. The Commission needs to revitalise the market for simple, standard and transparent securitisations. This should include a revision of the capital requirements for securitisations and recalibration of regulations on simple, standard and transparent securitisations. We support the Commission’s Green Paper on capital markets union and its desired outcomes of increasing the pool and variety of finance available, improving cross-border investment opportunities and making the economy more resilient to economic shocks.

I thank the members for their time and look forward to their questions.