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Simon Lewis, Chief Executive of AFME, said: “With the majority of the regulatory reform programme now adopted, the Commission is right to start examining the cumulative impact of regulatory reforms on the real economy. This is a key element of the CMU action plan, the Commission's flagship project to ensure capital markets flourish in Europe and deliver jobs and growth.”
Viewed in isolation, many of the measures from the regulatory reform agenda were both necessary and have had their intended effects. The regulatory reform programme has substantially strengthened the resilience of the banking sector, improved investor protection, and is significantly reshaping how financial markets operate.
AFME’s stand-out recommendations for reform concern the need to:
1. avoid further restrictions on market liquidity by inter alia amending the Central Securities Depositories Regulation and re-evaluating the case for Bank Structural Reform (BSR);
2. make targeted changes to prudential rules (e.g. Capital Requirements Regulation (CRR), Solvency II) which may be restricting financing to the economy;
3. carefully reflect before imposing any new regulatory burdens at Basel level.
“We need to make sure Europe's regulatory framework is efficient and fit for purpose. Our response focuses on reforms that will improve banks’ ability to finance the economy and provide much-needed capital market services,” added AFME’s CEO.
In addition to the response to the Call for Evidence, AFME has submitted a supplementary evidence note. The note takes stock of the EU regulatory reform programme that has been implemented and the structural changes that the wholesale financial markets have undergone. It also identifies some of the emerging concerns about the cumulative impact of regulation on long-term investment, credit allocation, market liquidity and risk management.