Uniform implementation of existing EU capital market rules rather than major regulatory overhauls was identified as the key to enabling cross-border investment across the European Union, argued the European Fund and Asset Management Association in a report published on 11 June 2025. The association’s recommendations were made in response to the European Commission’s ongoing efforts to remove barriers to capital market integration under its savings and investment union plan.
Efama stressed that legislative reform should not be the default mechanism for achieving integration, stating that each barrier must be evaluated on whether EU action is necessary and at which regulatory level. The report concluded that bold new proposals by the European Commission should be treated with caution unless there is conclusive evidence that they offer the most effective route to integration.
Uniform rule implementation
Vincent Ingham, Efama’s director of regulatory policy, emphasised that policymakers and supervisors should prioritise the uniform application of existing EU rules across member states. He warned against reopening legal texts, particularly in areas that had recently undergone review such as the Ucits and AIFMD frameworks. Ingham stated that legislative amendments should be considered only as a last resort due to the complexity, cost and delay they often entail.
Asset management and fund regulation
Efama identified the Ucits regime as a globally recognised framework for security, diversification, liquidity and transparency. The report advised against altering the core provisions of Ucits in order to preserve its status as a regulatory export brand. Instead, Efama supported less invasive measures, including improved codification, regulatory harmonisation and supervisory dialogue, particularly in areas such as approval timelines, fees and reporting obligations, which currently vary significantly between jurisdictions.
The report also noted that addressing inefficiencies in intra-group delegation practices could help asset managers better utilise group structures.
The report rejected proposals to grant the European Securities and Markets Authority (Esma) direct supervision over asset managers with cross-border operations. Efama concluded that such a move would not improve market integration and warned that the use of Esma-chaired supervisory colleges would increase complexity. Instead, the association advocated for greater use of Esma’s existing tools for supervisory convergence and suggested the authority serve as a central hub for supervisory data to facilitate information exchange among regulators.
Efama advised against importing elements of the US market structure, such as the order protection rule and mandatory order routing under regulation NMS. The report maintained that Europe’s best execution standard, which considers price, costs, speed and other factors, already offers an optimised client outcome. Efama warned that mandating interconnectivity between trading venues would increase costs without necessarily improving execution quality for investors.
Consolidated tape improvements
Efama supported the European Commission’s review of the pre-trade Equities/ETF consolidated tape. The report stated that including attributed European Best Bid and Offer (EBBO) data and five levels of quote depth from the outset would significantly enhance the commercial viability of the tape and address fragmented liquidity in the ETF market.
In addressing the EU’s fragmented post-trade environment, Efama recommended promoting competition and reducing friction through greater central counterparty (CCP) choice and central securities depository (CSD) interoperability. Although not as efficient as a single utility model, Efama concluded that this approach would realistically improve cross-border market function by lowering transaction barriers.
Distributed ledger technology
Efama agreed with the European Commission’s assessment of distributed ledger technology (DLT) as a transformative force for post-trading infrastructures. The report supported revision of the DLT pilot regime, stating that the current thresholds for market capitalisation and issuance size were too low to attract broad participation. Doubling these thresholds, Efama concluded, would make secondary markets more viable for DLT-based platforms and expand adoption.
Investor disclosures and Priips reform
The report called for urgent simplification of the Packaged Retail and Insurance-based Investment Products (Priips) framework but advised that changes be carefully designed to avoid increased implementation costs and preserve investor clarity. Efama proposed two specific changes. First, the deletion of implicit transaction costs, which it found expensive and complex to calculate while contributing minimally to investor understanding. Second, the removal of future performance scenarios, which the report deemed unreliable. Efama recommended reliance on past performance metrics in line with the Ucits framework.
