Capital markets integration and supervision: Master regulation [EU Legislation in Progress]

Written by Issam Hallak.

CONTEXT

The European Union’s competitiveness and prosperity depends on an optimal allocation of resources, particularly savings, within the single market, yet EU capital markets remain fragmented. EU rules are mostly set out through directives, leaving Member States’ supervisory authorities latitude in their interpretation and application of the rules. Therefore, although rules are enacted at EU level, the resulting uneven supervisory environment is considered a major cause of fragmentation of EU capital markets. EU-level supervision and regulation thus constitute instruments to ‘de-fragment’ – i.e. ‘integrate’ – the EU’s capital markets.

On 4 December 2025, the European Commission issued a package of three proposals to address this situation (the ‘market integration package’), as part of its savings and investments union strategy. The proposal to amend three directives – entitled the ‘master directive’ by the Commission – would primarily aim to enhance and facilitate the supervision of fund management firms operating in several Member States. It would also transfer current provisions in the Directive on markets in financial instruments (MiFID) to the Regulation on markets in financial instruments (MiFIR) in order to ensure their consistent application among Member States.

LEGISLATIVE PROPOSAL

2025/0382(COD) – Proposal for amending Directives 2009/65/EC, 2011/61/EU and 2014/65/EU as regards the further development of capital market integration and supervision within the Union – COM(2025)942, 4 December 2025.

NEXT STEPS IN THE EUROPEAN PARLIAMENT

For the latest developments in this legislative procedure, see the Legislative Train Schedule:2025/0382(COD)

Read the complete briefing on ‘Capital markets integration and supervision: Master regulation‘ in the Think Tank pages of the European Parliament.