February 2022

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Europe’s Capital Markets Union (CMU) is the idea of creating one capital markets framework with equal access for the entire European community. It is an important goal, and one that may not be completed in our lifetimes. CMU is starting from a complex reality of multiple regulatory regimes, political priorities and national champions across 27 countries (as of early 2022). The CMU offers perceived benefits but faces significant hurdles.

This report analyzes what the CMU is meant to do, how a single European market would compare against the US and China, and what market participants might expect over the next two years. Although a final CMU is unrealistic any time soon, incremental progress should be noted and could have important ramifications along the way.

Securities finance occupies a familiar seat in the CMU story. It is not mentioned by name but will be the recipient of impacts throughout the process, ranging from the European Single Access Point (ESAP) for data to integration of settlement mechanisms. CMU is similar in this regard to other major European regulations like MiFID II and MiFIR, which had few direct references to financing but where the indirect references were wide-reaching and much more important. Likewise, securities finance will need to read between the lines as CMU continues to take shape.

This report should be read by any capital markets participant interested in European or global markets with an emphasis on securities finance. CMU is a European phenomenon but its impacts will be seen worldwide.

Table of Contents

  • Executive Summary
  • A Work in Progress
  • The CMU Plan and Recent Updates
    • – The Four November 2021 Proposals
  • International Competition: How CMU Stacks Up
    • – Venture Capital Funding
  • The Agenda for 2022-2023
    • – Impacts for Securities Finance Markets
  • About the Author
  • About Finadium LLC

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