(BRUSSELS) – EU ambassadors agreed a negotiating mandate Wednesday on proposed rules to help Europe’s smaller businesses trying to list and issue securities on financial markets to tap market-based funding more easily and cheaply.
The rules agreed by the EU Permanent Representatives aim to reduce the administrative burden and high compliance costs faced by small and medium-sized enterprises (SMEs) trying to list and issue securities on ‘SME Growth Markets’, a new category of trading venue dedicated to small issuers.
The initiative concerns specifically “SME growth markets”, a recently introduced category of trading venue dedicated to small issuers.
The agreement was welcomed by the European Commission: “SMEs are central to growth and employment in the EU,” said EC vice-president Jyrki Katainen. “The proposal tabled by the Commission should make it easier for European SMEs to invest in innovation and growth.”
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. 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.
On the basis of this text, the EU Presidency is now able to start negotiations with the European Parliament on 6 March.