Trillions of euros are needed for Europe's economic recovery. EU proposals for accessible investment data and long-term funding must be more flexible and promote a transparent level playing field, to include more investors and businesses in capital markets.
European investors tend to be specialists who place funds in national markets, often over the short term, limiting the flow of capital to businesses that can drive the EU's green, low-carbon and digital transitions. At its March plenary, the European Economic and Social Committee (EESC) welcomed three Commission initiatives to broaden access to long-term and cross-border investment. These are the European Single Access Point (ESAP) for company information, the modernisation of the European Long-Term Investment Funds (ELTIFs) framework, and a consolidated tape system, which allows investors to compare prices within investment classes. However, the proposals need to be more ambitious and adaptable, and better include SMEs and small investors in the EU's capital markets, the EESC warns.
Florian Marin, rapporteur for the EESC opinion on the proposed ESAP, believes that the data platform for companies is a game-changer for innovative businesses, driving regeneration and stable growth.
The ESAP is important for SMEs as it will allow them to have access to the financial markets, to attract investment, and to contribute to the sustainable development goals, he said.
To maximise its reach, the platform must be more than just the proposed data repository – it should share information in accessible formats, be well supervised and be adaptable to a fast-changing investment landscape.
We are suggesting that the ESAP is designed as a flexible tool capable of processing data, adding new data categories, communicating with national registers and Eurostat, and taking into account different types of technologies, explained Mr Marin.
Long-term private funding is also vital for a healthy economy. According to Pierre Bollon, rapporteur for the EESC opinion on the Commission’s ELTIFs review: Redirecting savings towards long-term investments is necessary, particularly for a socially inclusive post-COVID recovery, for the green and digital transitions, and to strengthen the EU's strategic autonomy.
Despite this, the existing ELTIFs framework, launched in April 2015, has resulted in only 67 funds in just four Member States.
One reason is that it was too rigid for some investors. The EESC is pleased that the Commission is expanding the range of eligible investments and removing barriers to retail investors. The EESC has recommended making some ELTIFs redeemable before their terms end, an option which is currently not available for this type of fund.
Mr Bollon added to the call: We need retail investors to participate in long-term investments and benefit from their returns, and partially open-ended ELTIFs would enhance their participation.
Equally, price transparency from a consolidated tape system could drive forward the Capital Markets Union by reducing market volatility and reassuring investors, especially new ones.
Jörg Freiherr Frank von Fürstenwerth, rapporteur for the EESC opinion on a consolidated tape system, said: If well implemented, all market participants will be able to have access to virtually real-time data from all trading venues in Europe.
To develop public confidence for an equities-investment culture, the EESC calls for increased consumer protection and education.
As Mr Freiherr Frank von Fürstenwerth explained: The Commission proposal makes it clear how important it is to expand financial education in Europe. Otherwise, only some will be able to benefit from market opportunities.