Responding to the bounce in the turnout to the European elections that took place at the end of May this year, the French Asset Management Association - Association Française de la Gestion Financière (AFG) has organised in a panel discussion of financial and political experts to identify what impact the outcome of the elections could have on French financial markets.
The experts that took part included Marcel Grignard, chairman of the think tank Confrontations Europe; Stéphane Janin, head of Global Regulatory Development, AXA Investment Managers and chairman of the AFG's European and international Regulation Commission; and Wolf Klinz, German Liberal Democrat Party MEP.
The first point discussed by the experts was the raise of participation rate in the elections. They noted the increase in the number of countries voting for Green and Eurosceptic parties and the emergence of a fragmented, delicately-balanced European political landscape, which they suggested calls for greater vigilance over current and anticipated economic and financial issues during new term of the European Parliament.
The European Union faces numerous challenges, including: Brexit, with the continuing uncertainty over its terms; the offensive strategy of the United States in relation to international organisations and agreements; competition from Asian market players; and the global challenges of climate change and the digital revolution.
AFG noted that it has long supported the European project. This, it argues, should result, in the field of financial services, in the promotion of the European Union sovereignty in the face of external pressure and the strengthening of the international competitiveness of European players. Developments supporting this objective noted by AFG include:
- Execution of the Capital Markets Union (CMU) project, which is particularly necessary to avoid the risks of fragmentation in a multipolar Europe, where no financial centre will be dominant, even though Paris will play a leading role especially in the asset management sector;
- Introduction of regulations that are flexible enough to enable European players to grow and export, while providing them with the conditions for fair competition vis-à-vis external players active in our single market;
- Effective protection for European investors, by ensuring that information on savings products and solutions is clear, concise, understandable to all and does not discourage savings, which finance the economy;
- Progress in areas such as sustainable finance and new financial technologies, which the French asset management industry also makes a claim to be at the forefront of.
The European regulatory development process which applies to financial services needs rethinking, the experts suggested, because it is no longer suited to the system designed in the 2000s ("Lamfalussy process"). In particular, the tangle and instability of legislation is currently creating uncertainties and difficulties for businesses and confuses investors.
The European Union needs to see the financial sector as a "financial weapon", that is, a strategic and sovereign instrument in the service of the European economy, the experts argued.
In terms of the priorities that the new European Commission will set for itself, these will define its approach in the key areas of concern to the fund industry: revision of the AIFM, MIF 2, Priips and Ucits directives, implementation of the Pepp (Pan-European Pension Product), development of sustainable finance, a suitable regulatory structure for data providers - on which an increasing number of economic players (including asset managers) are dependent, while the majority of them originate from outside the European Union and are under- or even unregulated. The European Union should also be on the offensive with regard to cybersecurity and the digital economy.
Finally, they concluded by stating that the EU needs to set out a shared vision of long-term investment. Regarding these major challenges, they added that capital markets in Paris will need to further strengthen efforts to promote French and European interests in a post-Brexit context.
The AFG expressed confidence in the ability of Europe's new decision makers to take the measure of these objectives, which will increase the competitiveness and sovereignty of the European Union. The association, which has strengthened its presence in Brussels, stated it will work actively throughout the new EU parliamentary term.