28 Feb
European Union capital markets SMEs February 2019

Capital markets union: European Council agrees position on easier access to financial markets for SMEs

As part of the capital markets union, the European Union (EU) is taking steps to help small and medium businesses access new sources of funding.

EU ambassadors yesterday (28 February) endorsed the Council’s position on a proposal to give an easier access to SMEs trying to list and issue securities on financial markets, while safeguarding investor protection and market integrity. The initiative concerns specifically “SME growth markets”, a recently introduced category of trading venue dedicated to small issuers. On the basis of this text, the Presidency will start negotiations with the European Parliament on 6 March.

A small percentage

Of the 20 million SMEs in Europe, only 3,000 are currently listed on stock-exchanges. This is partially due to high compliance costs on the one hand and insufficient liquidity on the other. Therefore, the proposed rules aim to reduce the administrative burden and cut red-tape faced by smaller companies.

The proposal contains amendments to the market abuse and the prospectus regulations which make the obligations placed on SME growth market issuers more proportionate while preserving market integrity, in particular:

– More streamlined administrative burden that maintain market integrity and information to investors, in particular as regards reporting obligations as regards persons that have access to price-sensitive information (“insiders’ lists”);

– Lighter “prospectus” more suited to SMEs that have already been listed on an SME growth market.

Next steps

The Parliament voted on its position on SME listing on 7 December 2018. Negotiations between the Council and the Parliament are therefore ready to start.

Click here to access the text of the Council’s negotiating mandate on SME listing

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