Capital Cohabitation : EU Capital Markets Union as Pubic and Private Co-Regulation

This paper asks what Capital Markets Union (CMU) means for the future of financial market regulation in the European Union and suggests an answer: the merging of public and private regulation. In the pre-crisis period, public regulation and private regulation of financial markets were separate spheres, with light-touch public regulation sitting alongside private market ordering. In response to crisis, there has been a period of command regulation, which is now moderating in favour of regulatory ‘recalibration', not only regarding regulation of capital markets and securities but also of banking. CMU and its close cousin, the European Fund for Strategic Development, do have specific content but, more broadly and more significantly, they announce a post-crisis, post-command regulation phase. The EU is signalling willingness to review and fine-tune public regulation and to work more closely than hitherto with private regulators. Such partnership, exemplified by CMU, has the potential to impact the governance of the EU generally as well as that of the financial markets