The EU Commission presented the Capital Markets Recovery Package
(“CMRP“) at the end of July 2020. On 21
October 2020, Member States’ ambassadors to the EU agreed the
Council’s position. The EU presidency will
start negotiations with the European Parliament as soon as the
Parliament has adopted its position, with a view to adopting the
package by the end of 2020.
The CMRP consists currently of four proposals amending: i) the
Markets in Financial Instruments Directive (“MiFID
II“), ii) the Prospectus Regulation and Transparency
Directive, and iii) the securitisation framework laid down in the
Securitisation Regulation and the Capital Requirements Regulation
(“CRR“). The overall aim is to
facilitate the use of the capital markets sector to support
Europe’s recovery from the COVID-19 crisis.
The CMRP proposes amendments to the MiFID II rules to
simplify information requirements and address the needs of the
commodity derivatives market.
The new rules would reduce the level of information provided to
professional investors, and, in some limited cases, to retail
investors. Paper-based information will be discontinued, unless
retail clients request it. The proposal exempts ‘plain
vanilla’ bonds sold to both retail and professional investors
from certain information requirements. ‘Best execution’
reports by trading venues would be discontinued in order to free up
The proposal also includes changes aimed at supporting the
growth of euro-denominated derivatives markets.
Prospectus Regulation and Transparency Directive
The proposal includes the introduction of an
‘EU Recovery Prospectus’, a shorter prospectus which
experienced issuers could use to disclose information for new
issuances. The Council position expands the minimum information to
be included as compared to the Commission proposal. The Council
also proposes that the Recovery Prospectus should be limited to
offers equivalent to no more than 90% of outstanding capital, with
a view to limiting diluting issuances.
Again with the idea of freeing companies’ resources, the
Council also proposes amendments to the Transparency Directive, to
allow member states to postpone for a year the requirement for
listed companies, and certain listed issuers of debt securities, to
prepare all annual financial reports in a European Single
Electronic Reporting Format (ESEF) for financial years beginning on
or after 1 January 2020.
Securitisation Regulation and CRR
One CMRP proposal extends the existing EU framework for
simple, transparent and standardised (STS) securitisations to
Also, regulatory obstacles to the securitisation of
non-performing exposures (NPEs) would be removed to support banks
in offloading NPEs from their balance sheets in the context of the
Another Council proposal suggests a dedicated prudential
treatment for synthetic excess spread
(“SES“) in the CRR to address the risk
of a potential misuse of SES for arbitrage purposes.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.