The European Commission must prioritise non-bank finance and deeper capital markets as part of its regulatory review, according to the Alternative Investment Management Association (AIMA).
AIMA made the comments in its response to the European Commission’s Call for Evidence on the EU regulatory framework for financial services, published in September 2015.
In its response, AIMA explains that capital market financing is more long-term and transparent, encourages greater innovation and discipline, which leads to better allocation of resources and economic growth.
However, regulatory barriers still prevent capital markets and non-banking finance from developing further in the EU.
AIMA makes the case that rules should allow greater asset managers’ participation in securitisations in order to support the supply of finance to small and medium-sized enterprises (SMEs). AIMA also argues that greater holding of financial assets by institutions and investors that can bear risk without the need for public support – such as investment funds – will improve financial stability.
The response addresses a number of other areas where AIMA believes that existing regulation is not achieving its intended policy objectives, highlighting: the need to consider carefully the reform of market infrastructure to support liquidity as agreed standards are implemented; the need to look again at regulatory reporting to ensure that supervisors are collecting the right data in the most effective way possible; the importance of finalising the need to review public short-selling disclosure requirements which has hurt equity market liquidity.
Jack Inglis, CEO of AIMA, says: “We recognise that most of the regulatory measures introduced since the financial crisis were intended to address key policy concerns and market failures. Our members welcome the opportunity to be part of the review and evaluation of this new regulatory framework in order to ensure that the policy objectives are being met and, if not, to adjust the structure where necessary.”