ESBG concerned about impact of ISD on SME Finance

01 July 2003

In a contribution to the Commission Green Paper on Entrepreneurship, the European Savings Banks Group (ESBG) expressed its concern about the impact of the Investment Services Directive (ISD) proposal on SME financing.

Should it be decided by the European Parliament to allow investment firms to internalise orders in a systematic manner by reducing the scope of the directive to retail size orders, there is a risk, that a substantial portion of liquidity is removed from stock exchanges.

“Systematic internalisers” are likely to focus on the most liquid securities. Consequently, a major part of trade in these shares could be channelled through alternative execution venues, thereby endangering the existence of smaller local or regional stock exchanges. It is precisely these exchanges who continue to provide a gateway to international capital markets for smaller or start-up companies. Such developments would negatively impact on the Commission’s goal to promote entrepreneurship and meet its Lisbon goals.

ESBG Press release

© European Savings Banks Group