The horizon scanner identifies and summarises key EU legislative and non-legislative initiatives that are likely to impact firms providing financial services in the EU, which are grouped thematically.

It also sets out projected timelines for the finalisation and implementation of relevant legislative initiatives, covering approximately the next 18 months to two years.

This horizon scanner has been prepared as of May 2018. It does not constitute legal advice and is not intended to provide an exhaustive list of all provisions or requirements applicable to such firms during this period.

Today’s regulatory landscape

Following the financial crisis and resulting G20 commitments, the EU embarked on an unprecedented and wide-ranging set of regulatory reforms, including new rules to strengthen financial supervision, tools for bank recovery and resolution, more effective deposit protection and an improved regulatory framework for banks, insurance, securities markets and other sectors.

A decade later, this project is now largely complete, with the last major legislative measure of the post-crisis regulatory agenda, MiFID2, which started to apply from 3 January 2018.

Looking ahead

More recently, attention has turned to fine-tuning the EU financial services regulatory framework with the adoption of targeted follow-up actions, ensuring that regulation keeps pace with technological development, and completion of the Banking Union and Capital Markets Union.

Against the backdrop of Brexit, there has also been a renewed push for further EU integration and supervisory convergence with the publication of proposals in September 2017 to give greater supervisory powers to the European Supervisory Authorities (ESAs).

Completing Europe’s Economic and Monetary Union

In December 2017, the Commission published a Roadmap for completing Europe’s Economic and Monetary Union (EMU), which included adoption of all remaining proposals on Banking Union during 2018 and finalisation of all pending legislative initiatives for Capital Markets Union (CMU) before the end of the current Commission mandate and EU Parliament elections in mid-2019.

Building blocks for CMU

Following the Commission's mid-term review of the Capital Markets Union Action Plan in Summer 2017, the Commission identified a wide-ranging set of measures that it aims to put in place by mid-2019, including:

• legislative proposals for greater EU supervisory convergence, including the Omnibus 3 proposals (published September 2017)
• a legislative proposal for a new prudential regime for investment firms (published December 2017)
• a legislative proposal on assignment of claims and conflicts of laws (published March 2018)
• a FinTech action plan and legislative proposal on crowdfunding (published March 2018)
• a legislative proposal to facilitate cross-border distribution of UCITS and AIFs (published March 2018)
• a legislative proposal on covered bonds (published March 2018)
• an Action Plan on sustainable finance and related measures (published March 2018 with further measures expected Q2 2018)

Completing the Banking Union

In October 2017, the Commission called for accelerated progress to agree and adopt various measures to complete the Banking Union by 2019, including:

• implementation of the Total Loss Absorbing Capacity (TLAC) standard and amendments to capital requirements to reflect remaining Basel reforms, including the introduction of a leverage ratio and net stable funding ratio (NSFR)
• finalisation of the proposed European Deposit Insurance Scheme (EDIS)
• development of a last resort common fiscal backstop to the Single Resolution Fund, including a credit line from the European Stability Mechanism (ESM)
• new measures to reduce non-performing loans (NPLs)
• supervising large investment firms carrying out bank-like activities in the same way as credit institutions within the Single Supervisory Mechanism (SSM) framework
• the development of sovereign bond-backed securities (SBBS) (legislative proposal expected May 2018)

In his September 2017 State of the Union address, Jean-Claude Juncker also set out his view that all Member States should be encouraged to join the Banking Union.

Looking beyond 2019

Looking further ahead to the period up to 2025, in its reflection paper on the deepening of the Economic and Monetary Union, the Commission identified medium term possible steps towards completing the Economic and Monetary Union, including:

• Continuous implementation of CMU measures and roll-out of the EDIS
• Transition to the issuance of a "European safe asset", comparable to US Treasury bonds
• Changes to the regulatory treatment of sovereign exposures (possibly through the sovereign bond-backed securities proposal expected in early 2018)
• Creation of a macroeconomic stabilisation function for the Euro area (possibly through a proposal to transform the ESM into a European Monetary Fund)
• Changes to EU-level accountability and governance frameworks