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EU capital market reforms won't unleash wave of new rules: Hill

Tuesday, February 3, 2015 - 22:56

[LONDON] European Union plans to make markets better at raising cash for companies won't spawn a wave of legislation, the bloc's financial services chief said on Tuesday.

Jonathan Hill is the commissioner responsible for putting in place a capital markets union (CMU), a cornerstone of the EU executive's plans to boost jobs and growth by for example investing more in roads and start-up companies.

Brussels wants to cut the economy's reliance on banks for funding, but banks and some policymakers fear the CMU will be a platform for another wave of rules, a view Mr Hill rejected.

"It won't unleash a wave of legislative proposals," Mr Hill told a committee of lawmakers in Britain's House of Lords.

He is due to publish a discussion paper on Feb 18 outlining his plans, as reported by Reuters last week.

The aim was to put in place the building blocks of the CMU by 2019 through a mix of legislation and industry-led changes.

"Quick wins" included developing safe securitisation whereby loans like high quality mortgages are pooled to create bonds that are sold to raise cash for companies, he said.

Improving credit information about small and medium-sized companies, and encouraging the private placement or investment market were also priorities.

He also wants a seamless cross-border market in retail financial services like car insurance to drive down costs for consumers, and cut costs for companies that want to list on stock markets to raise funds.

More politically contentious issues such as whether attempts should be made to harmonise national insolvency and tax laws would come later.

Some of the 40 or so EU financial laws passed since the 2007-09 financial crisis will also be reviewed to make sure they are having the right effect and do not hinder economic growth unduly.

How markets are supervised by EU watchdogs may also need reviewing to stop national regulators imposing unnecessary extra requirements.

The watchdogs, like the European Securities and Markets Authority, say they don't have enough money to write all the rules in a timely way to implement new EU financial laws.

Mr Hill said he will need to propose legislation on funding the watchdogs from a fee on financial firms, a system widely used in member states across the EU.

REUTERS