15 February 2022

ESMA response to the Commission consultation on the Listings Act

ESMA welcomes the Commission’s targeted consultation on the Listings Act and would like to take this opportunity to share our views on adjusting different parts of the regulatory framework to facilitate better access to capital for Small and Medium-sized Enterprises (SMEs) and making public capital markets more attractive for EU companies, while also ensuring strong investor protection.

The annex to this letter contains some more targeted responses to the Commission’s consultation questions relevant to ESMA, but in addition we wish to convey in this letter some overarching remarks.

This consultation comes at an opportune moment for the EU to reflect on the current framework, as EU businesses continue to face challenges posed most recently by the COVID-19 pandemic, but at the same time as notable progress is being made on other parts of the CMU agenda. While the EU’s capital markets have integrated steadily in the past four decades, they remain less developed than in other major jurisdictions. EU businesses continue to heavily rely on bank financing, with less than one-third of businesses securing finance from the EU’s capital markets. In comparison, almost two-thirds of US businesses are financed through the US capital market. With the UK’s departure from the EU and considering that the UK is currently reforming its primary markets rules, we believe it is right to give further impetus to the CMU agenda now and to review the EU’s listing rules, amongst others.

To develop sound, effective and globally attractive EU markets, we firmly support the need to further develop the EU’s capital markets and mobilise more financing opportunities to benefit SMEs and other companies and stimulate sound and sustainable economic growth in the EU. By improving access to EU capital markets for SMEs, and improving the overall attractiveness of EU capital markets, retail investors will in turn be empowered by increased choice to diversify their savings and investments. In this context it is important to ensure that the initial and ongoing costs for listing, as well as the degree of regulation, is proportionate and balanced. Nonetheless, strong investor protection is a prerequisite for retail participation and the basis to maintain trust in our financial system, so any consideration for reducing regulatory burdens on issuers must be measured against that consideration.

New and diversified funding sources, in particular equity funding, for SMEs and other companies are key to spurring growth and employment, efficiently allocating capital, and sharing risks. While the regulatory framework in place regarding listing activities is strong and effective, there is scope to streamline certain rules and find ways to carefully alleviate certain burdens for issuers, which may in turn reduce costs and enhance incentives for listing. Of course, any adjustments in the regulatory framework must continue to be done in a harmonised way to allow for strong convergence of the supervision and enforcement of those rules.
With that in mind, we wish to convey some overarching views in relation to key aspects of the consultation...

more at  ESMA

© ESMA