The French Autorité des marchés financiers (AMF) has issued a public statement calling on the European Commission to improve capital markets and boost retail participation away from savings and into “long-term investments.”
In the US, over 60% of the population holds shares in public companies. In many cases, this has to do with investments held in retirement accounts.
In France, it is only around 25%.
In fact, AMF research indicates that the population of France is very risk averse as 58% of French people are unwilling to accept a little more risk on part of their investments, preferring stable returns. The “French remain very attached to savings and are not very willing to take risks.”
On 3 February, the EC called on stakeholders to share feedback on the Savings and Investments Union.
In preparation for its response, the AMF asks the EC to “enable rapid and concrete progress” for EU markets.
The AMF has proposed three different objectives:
- Encourage retail investment in the European economy: the abundant savings of EU households need to be better channelled into financing the EU economy through long-term investments. An EU label, together with a favourable tax treatment, should distinguish the most attractive products for the long-term financing of European businesses. Simplifying the customer journey for investors, without compromising on their protection, should also facilitate the channelling of savings into investment.
- Strengthen European supervision: the fragmentation of capital markets’ supervision is an obstacle to their development. It also entails financial risks, a race to the lowest regulatory standards to the detriment of investor protection, and is one of the main causes of regulatory complexity in Europe. The AMF therefore calls for decisive progress towards a more integrated supervision of financial players at the EU level, without which no real simplification will be possible.
- Relaunch the securitisation market: the securitisation of bank loans is essential to restart the credit engine; it is also a unique opportunity for the development of capital markets, offering investors safe securities backed by high-quality loans. The AMF sees the revision of the Securitisation Regulation as an opportunity to boost the European market, which is underdeveloped compared to the United States, while maintaining the high level of security that is the hallmark of EU securitisations.
Marie-Anne Barbat-Layani, AMF Chair, commented on the French proposal:
“In terms of financial services, the Savings and Investments Union is the project of our generation! At the end of the last century, our predecessors built the single currency, which is now proving to be a valuable shield against financial shocks. Putting an end to the fragmentation of European financial markets and finally allowing them to develop is now a necessity if the financial engine is to give Europe the means for its strategic autonomy and political choices. It is our responsibility to move this project forward, and the AMF has a role to play.“
While it is not yet clear as to the details, tax reform is a big incentive to encourage investors to participate in capital markets. Tax benefits and exemptions can be provided to both individual investors and institutional money to help finance both public firms as well as innovative early stage ventures.
The AMF will soon publish more detailed proposals on its opinion.
