EC Proposes to Adopt More Proportionate Rules to Support SME Listing
EC proposed new rules to give small and medium enterprises (SMEs) better access to financing through public markets. This initiative encompasses a legislative proposal that amends certain technical rules in the Market Abuse Regulation (MAR) and the Prospectus Regulation, along with the envisaged technical amendments to delegated acts (also known as level 2 measures) under the Markets in Financial Instruments Directive (MiFID II). The proposal involving Level 2 measures is to amend Commission Delegated Regulation (EU) 2017/565 regarding certain registration conditions to promote the use of SME growth markets for the purposes of Directive 2014/65/EU of the European Parliament and of the Council. The proposal for a regulation amending the market abuse and prospectus rules will now be discussed by the European Parliament and the Council while amendments to the MiFID II delegated act will be published online for a four-week consultation, after which they will be adopted by EC and sent to the European Parliament and the Council for their scrutiny. The consultation on the MiFID II delegated regulation ends on June 21, 2018.
The initiative is confined to “SME growth markets,” a new category of multilateral trading facilities created by the Markets in financial instruments directive (MiFID II) as of January 2018 to facilitate access to capital for SMEs. The proposed amendments should boost companies' listing on SME Growth Markets in a way that preserves the core EU rules established to restore confidence in financial markets after the financial crisis. The rules aim to reduce the administrative burden and cut red-tape for small and medium companies trying to list and issue securities on SME Growth Markets. The new rules will introduce a more proportionate approach to support SME listing while safeguarding investor protection and market integrity. This legislative proposal is one of the numerous measures presented by EC since the launch of the Capital Markets Union in 2015 to improve SMEs' access to market-based finance. Main proposed changes to SME listings rules:
- Adapt current obligations to keep registers of persons that have access to price-sensitive information, with the aim to avoid excessive administrative burden for SMEs, while ensuring that competent authorities can still investigate cases of insider dealing.
- Allow issuers with at least three years of listing on SME Growth Markets to produce a lighter prospectus when transferring to a regulated market. This proposal goes even further than the already overhauled and simplified prospectus rules in terms of making it easier for firms to tap capital markets in Europe.
- Make it easier for trading venues specialized in bond issuance to register as SME Growth Markets. This will be done by setting a new definition of debt-only issuers. Those would be companies that issue less than EUR 50 million of bonds over a 12-month period.
- Create a common set of rules on liquidity contracts for SME Growth Markets in all member states, in parallel to the national rules. This refers to agreements between issuers and financial intermediaries (a bank or an investment firm) for buying and selling shares of and on behalf of the issuer. By so doing, the financial intermediary enhances the liquidity of the shares.
Related Links
- Press Release
- Proposals to Amend MAR and Prospectus Regulation
- Draft Delegated Regulation Amending MiFID II
Comment Due Date: June 21, 2018 (Commission Delegated Regulation)
Keywords: Europe, EU, Securities, MAR, Prospectus Regulation, MiFID II, SME Listing, Proportionality, Capital Markets Union, EC
Previous Article
BDF Updates Document on AnaCredit Controls for ReportingRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.
