CMU to back market initiatives over further regulation, Hill says

The Capital Markets Union (CMU) will initially back private market initiatives rather than introduce new regulation, with financial stability commissioner Jonathan Hill reiterating that further regulation should not always be regarded as the answer.

Speaking at a public hearing on the CMU, Hill said he welcomed the more than 700 consultation responses the European Commission had received since launching its green paper earlier this year.

Discussing one area he hoped would soon bear fruit, Hill said the initiative to stimulate the debt market would build on the success of previous private placements to increase the amount of capital in circulation.

“Most respondents to our consultation said we should give time to recent market-led initiatives by the industry to allow them to bear fruit rather than regulating,” he said.

“I very much welcome the steps taken by the industry and will be following their progress closely. And I agree legislation is not always the answer.”

Hill previously told IPE he hoped the market would create the solutions needed to launch a CMU, rather than rely too heavily on legislation.

The commissioner also signalled that changes would be made to Solvency II to allow for greater investment in infrastructure, as soon as he had received the report from the European Insurance and Occupational Pensions Authority (EIOPA) later this month.

He also highlighted the pensions sector as one of the largest potential sources for equity and infrastructure.

“The IORP II proposal currently being discussed would give pension funds the freedom to invest in assets with a long-term economic profile on unregulated markets,” he said.

“EU member states have already agreed their position on IORP II, and I hope that work in the European Parliament can move forward quickly, too.”

However, a final report by the European Parliament on the revised IORP Directive is still some months away, with Irish MEP Brian Hayes, appointed rapporteur for the Directive, only concluding the first public hearing late last month.