Capital Markets Union
Deutsche Börse Group supports the European Commission’s Capital Markets Union (CMU) initiative of further integrating European financial markets to foster economic growth.
European companies mainly turn to their local banks for funding. The CMU aims to diversify the sources of funding by encouraging non-bank funding such as equity and debt financing. The EU is also envisaging a revival of securitisation which took a strong hit after the financial crisis. By removing these barriers to cross-border funding, the EU is effectively removing fragmentation in European capital markets which in turn will stimulate the European economy.
In September 2015, the European Commission published an action plan on building a Capital Markets Union by 2019. While some of the implementation measures may be modest, their cumulative impact will be significant. For example, the Commission has adopted initiatives on securitisation, Solvency II, venture capital funds, covered bonds, calls for evidence as well as retail financial services.
Clearstream services in support of the CMU action plan
Clearstream offers services which ease access to non-bank funding, foster market harmonisation and support securitisation:
Issuance with T2S: Since investors tend to favour their home market, issuers do likewise. T2S facilitates issuance across Europe by addressing this home market bias. Customers can access T2S via Clearstream’s CSDs in Germany and Luxembourg. As a result, issuers can choose Clearstream’s Global Issuer Hub for all their issuance needs in T2S and beyond. Its comprehensive services cover the entire lifecycle of a security.
Global Securities Financing: Clearstream’s Global Liquidity Hub gathers collateral across markets and custodians into a virtual collateral pool to give customers a clear overview of all their available collateral. This pooling of assets as well as the increasing use of the Global Liquidity Hub’s collateral management services around the world fosters capital market integration and promotes standardised collateral management practices. In addition, Clearstream’s triparty repo services facilitate non-bank funding for corporates as they gain easy access to securities which can then be re-used for other purposes such as CCP margining for derivative trades.
Securitisation: Regulators have championed simple and transparent securitisation to revive the link between banks and capital markets following the financial crisis. Clearstream offers comprehensive domestic and international issuance, safekeeping, asset servicing and collateral management services for these securities.