Capital Markets Union and the Need for Greater Retail Investor Participation in Financial Markets: Is Now the Time for an EU-wide ISA?

Abstract

The following article was first published by Thomson Reuters (Professional) UK Limited in Vol. 31, Issue 9 of the Journal of International Banking Law & Regulation and remains topical in 2019 and beyond.

Encouraging greater retail investor participation in European capital markets continues to be faced with challenges. The UK is one jurisdiction that has a long experience in attracting retail investor participation by using legislative measures that provide focused tax-efficient savings and investment products. The British Individual Savings Account (ISA) product has contributed to transforming household income into market value creation. The following article looks at the rationale for such products, the UK and Swedish models, the interrelation with confidence backstops of depositor protection and investor compensation schemes and concludes with some proposals on what such an EU-wide jurisdiction agnostic regime might look like in building an EU or EMU-wide ISA product (E-ISA) and what this might mean for retail investors. The treatment of income and investment related tax, including in intragovernmental arrangements between EU or EMU Member States, is specialised and complicated and consequently remains beyond the scope of this article.

Keywords: Banking Union, Capital Markets Union, Brexit

JEL Classification: K00, K22