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A key element of the Capital Markets Union agenda, the new rules willensure that smaller businesses in the EU have access to diversified sources of financing at each stage of their development. In particular, the revised rules will make it cheaper and simpler for SMEs to access public markets through the so-called 'SME Growth Markets', a new category of trading venue dedicated to small issuers.Listing on stock exchanges can give a significant boost to small and medium enterprises, including a reduced dependence on bank funding, a broader investor base, easier access to additional equity capital and debt finance, and a higher public profile and brand recognition.
The proposal provides for targeted amendments to two key pieces of financial services legislation, namely the Market Abuse Regulation (MAR) and the Prospectus Regulation.
The amendments to the rules on market abuse aim to strike a balance between cutting red tape for small businesses while safeguarding market integrity and investor protection. The revised framework also creates a common set of rules on liquidity contracts for SME Growth Markets in all Member States while giving national competent authorities sufficient flexibility to tailor market practices to local conditions. This will ensure minimum liquidity and reduce volatility of SME shares.
The proposed changes to the Prospectus Regulation will allow issuers in SME Growth Markets to produce a lighter prospectus when transferring to a regulated market (i.e. a main stock exchange), which can lead to significant cost-saving for growing SMEs.