EACT Letter on Capital Market Funding

The EACT has sent a letter to key EU decision-makers on the importance of ensuring continued access to capital market funding for European corporates. We currently see that whilst reducing reliance on bank funding and increasing the role of capital markets is a stated: EU policy objective, in practice current legislative initiatives are not always supportive of this. We are particularly worried about the following developments which both discriminate against corporate bonds and ignore the important role they play in financing the real economy:

• The forthcoming Commission proposal on the structural separation of banks, which could substantially limit the ability of financial institutions to underwrite and make markets for corporate bond issuance. Furthermore, we understand from recent reporting that unhelpful discrimination is being introduced by exempting market making for government bonds.
• MiFID/R II, which would restrict market making of corporate bonds on certain venues - here again the planned restrictions would not apply to government bonds.