After Brexit, the European Union's executive body published draft laws on Thursday to build a deeper market in securities for helping recover from COVID 19, raising funds for 'green' projects and building 'autonomy' in financial services.
ESAP is due to go live in 2024 and will be operated by the EU's securities watchdog ESMA, which is the EU's answer to EDGAR used by companies in the United States for mandatory filings. It will collect filings from national bodies in the bloc to give investors a single point of information on listed companies and EU financial products.
Since so few have been set up, the rules for ELTIFs, which channel funds to smaller companies, will be made more flexible to give access to retail investors and ease marketing requirements on professional investors.
Clarifying when a fund listed in the EU can delegate stock and bond picking to asset managers based outside the bloc in countries like Britain and the United States is a longstanding practice known as delegation. Clarified rules will apply to alternative funds such as hedge funds and extended to EU mutual funds known as UCITs. To avoid becoming a letter box company, funds would need at least two full-time staff in the bloc. A majority of a fund's assets should be in the EU.
Setting out ground rules for creating a consolidated tape or record of stock prices and separate tape for bonds and derivatives to identify venues that offer the best prices. There will be stricter rules for trading shares off an exchange and'mid-point' trading, which is popular with big investors.
A ban on trading operators that give incentives for directing retail client stock orders to them is known as payment-for-order flow.
If requested, clearing houses must clear exchange traded derivatives from another exchange.
The proposals need approval from the European Parliament and EU member states to become law, a process that typically involves compromises and changes.