EU Aims to Create a Single Capital Market

What the document is trying to fix
The EU’s capital markets are still split up. Different member‑states use their own rules for trading, clearing, asset‑management and fund‑marketing, which makes it hard for firms to operate across borders, raises costs for investors and slows the growth of the single market. The proposal also wants to make it easier to use new technology such as distributed‑ledger (DLT) and tokenisation, and to give the European Securities and Markets Authority (ESMA) more power to keep supervision consistent.

How the problem is being solved

• Amend the three main EU rules – UCITS (2009/65/EC), AIFMD (2011/61/EU) and MiFID II (2014/65/EU) – so that:
• national “discretionary” rules that create barriers are removed.
• a single EU passport for depositaries is created, allowing a fund to use a depositary in any member‑state.
• groups of asset‑management companies and AIFMs can share resources without being treated as separate entities.
• ESMA gets new tools to supervise the biggest trading venues, central‑counterparty and asset‑management groups at EU level.
• DLT‑based innovation is covered by a pilot regime that is easier to use and still protects investors.
• Administrative steps for authorising and marketing funds are simplified and many time‑frames are cut (e.g., from 1 month to 15 days for certain notifications).
• Limits on how much a UCITS can invest in a single issuer are raised (e.g., from 10 % to 15 % for securitisations, from 20 % to 35 % for index‑tracking UCITS).
• Rules that were already in EU regulations (MiFIR, CSDR, EMIR) are moved out of the directives to reduce overlap.

What changes will result

• UCITS and AIFMs will be able to operate across the EU with a single licence, use a depositary anywhere in the Union, and share staff and systems within their group.
• Trading venues and post‑trading infrastructures will be supervised by ESMA, and many national “gold‑plating” requirements will be removed.
• ESMA will conduct annual reviews of the largest asset‑management groups (net assets > €300 bn) and can intervene if national authorities do not follow EU rules.
• DLT and tokenisation will be allowed under a clearer, less burdensome regime.
• Administrative burdens for firms and investors will fall: notification periods are shortened, many authorisation steps are moved to regulations, and the need to produce separate documents for each member‑state is cut.
• Entry‑to‑force: the directive will become law 20 days after it is published in the Official Journal (expected 4 December 2025) and member‑states will have 18 months to transpose the new rules.

Overall, the proposal aims to make EU capital markets truly single, cheaper, and more innovative, while giving ESMA the tools to keep supervision consistent across all member‑states.