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Brussels, |
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SME listing on public markets
The EU aims to make it easier for small and medium enterprises (SMEs) to raise capital on public markets.
To address these issues, the EU introduced the 'SME growth market', a new type of multilateral trading facility under MiFID II. This regime has been further enhanced through legislative measures like the SME Listing Act and associated packages.
This initiative is a key component of the Capital Markets Union (CMU), which seeks to broaden access to market-based financing for European companies at all stages of their development.
To address these issues, the EU introduced the 'SME growth market', a new type of multilateral trading facility under MiFID II. This regime has been further enhanced through legislative measures like the SME Listing Act and associated packages.
This initiative is a key component of the Capital Markets Union (CMU), which seeks to broaden access to market-based financing for European companies at all stages of their development.
Benefits for SMEs
Listing on stock exchanges offers several advantages for SMEs:
Challenges and Solutions
Despite these benefits, SMEs face significant hurdles in accessing public markets:
On 7 December 2022, the European Commission has today put forward measures to further develop the EU’s Capital Markets Union (CMU), in order:
These are the new legislative proposals by the Commission:
On 1 February 2024, a provisional agreements on the listing act was announced. The texts of the provisional agreement will now be finalised and presented to member states’ representatives and the European Parliament for approval. If approved, the Council and the Parliament will have to formally adopt the texts. The Parliament adopted the agreement on 24 April 2024:
- Reduced Dependence on Bank Funding: Access to diverse financing options beyond traditional bank loans.
- Investor Diversification: Attracts a wide range of investors.
- Access to Equity Capital and Debt Finance: Easier to raise additional funds.
- Increased Public Profile: Enhances brand recognition and credibility.
Challenges and Solutions
Despite these benefits, SMEs face significant hurdles in accessing public markets:
- High Compliance Costs: Expensive regulatory requirements deter issuers.
- Insufficient Liquidity: Low liquidity levels can increase capital costs and deter investors.
On 7 December 2022, the European Commission has today put forward measures to further develop the EU’s Capital Markets Union (CMU), in order:
- to make EU clearing services more attractive and resilient, supporting the EU’s open strategic autonomy and preserving financial stability
- to harmonise certain corporate insolvency rules across the EU, making them more efficient and helping promote cross-border investment
- to alleviate – through a new Listing Act – the administrative burden for companies of all sizes, in particular SMEs, so that they can better access public funding by listing on stock exchanges
These are the new legislative proposals by the Commission:
- Proposal for a Directive amending the Undertakings for Collective Investment in Transferable Securities Directive (UCITSD), the Capital Requirements Directive (CRD) and the Investment Firms Directive (IFD)
- Proposal for a Regulation amending EMIR, the Capital Requirements Regulation (CRR) and the Money Market Funds Regulation (MMFR)
On 1 February 2024, a provisional agreements on the listing act was announced. The texts of the provisional agreement will now be finalised and presented to member states’ representatives and the European Parliament for approval. If approved, the Council and the Parliament will have to formally adopt the texts. The Parliament adopted the agreement on 24 April 2024:
- Increasing the attractiveness of public capital markets and facilitating access to capital for SMEs – amending certain Regulations
- Increasing the attractiveness of public capital markets and facilitating access to capital for SMEs – amending Directive
