Published: 24 February 2023 - Updated: 3 March 2023

FESE supports the European Commission’s review of the EU legislative framework for primary markets and its focus on strengthening capital markets. Strong capital markets play a key role in economies as one of the most powerful drivers of growth and wealth creation, and an important prerequisite for this is an attractive and vibrant listing ecosystem. While FESE welcomes many of the Commission’s proposals, we believe that more can be done in certain areas to contribute to the realisation of the CMU project and address the multiple obstacles European IPO markets face.

In this paper, FESE assesses the Commission’s proposed Listing Act and offers some suggestions for strengthening the overall package of reforms.

FESE’s Key Messages on the Commission Proposal

Prospectus Regulation

• FESE supports the standardisation of the prospectus for primary issuances. We are, in principle, in favour of introducing a page limit for equity prospectuses, and we support the option to publish a prospectus in English only (except for the summary) and in electronic format only. FESE also believes that the EU Growth Prospectus will benefit from further harmonisation and standardisation. We welcome the replacement of the existing Growth Prospectus with a new, standardised, EU Growth issuance document.
• We welcome the proposed additional exemptions for secondary issuances. We also welcome the proposed summary document to be filed with the appropriate NCA for non-exempted secondary issuances. However, NCAs should not be allowed to ask for additional documentation.
• We support the proposed amendments to foster convergence of the scrutiny and approval process by NCAs, which are the appropriate authorities for this task.
• FESE suggests clarifying when and how an equivalence decision can be initiated and assessed for third-country issuers, avoiding a “race to the bottom”.
• Any new disclosure documentation for debt securities which consider ESG factors or objectives should be viewed alongside the proposal for the EU Green Bond Standard.

Market Abuse Regulation

• FESE is concerned about the possible negative implications of the establishment of a cross-market order book supervision (CMOBS) mechanism. The existing framework of ad hoc requests in cases of suspected market abuse seems appropriate and sufficient to achieve effective oversight. Furthermore, data from market participants in the bilateral trading space is not covered. Should the CMOBS mechanism be established, it should also apply to SIs and OTC transactions.
• FESE welcomes narrowing the definition of inside information as proposed. Furthermore, FESE believes that more concrete guidance from ESMA is needed. We believe the proposal on delaying the disclosure of inside information should increase consistency across the EU.
• We support the removal of the requirement for market operators to agree to the terms and conditions of liquidity contracts if they are not involved.
• FESE favours the proposal to raise the threshold for disclosure of managers’ transactions to EUR 20,000 but suggests this should be harmonised at the EU level. Furthermore, we believe that only the minimum number of personal information fields necessary for supervisory purposes should be included in an insider list for SME GMs.

MIFID II

• Equity research is a necessary tool to increase the visibility of SMEs. FESE supports adjusting the threshold of companies’ market capitalisation to coincide with a harmonised definition of an SME company, below which the unbundling rules do not apply.
• FESE proposes the minimum 10% free float requirement to apply only at the moment of listing of an issuer. We also propose there is room for flexibility (Art. 48(5) from the Listing Directive should be fully transposed into MiFID II).
• FESE proposes modifying article 33(7) of MiFID II to make it explicit that issuers admitted on an SME GM may only on their own request be admitted to another trading venue.

Multiple voting rights Directive

• FESE supports the Commission’s proposed Directive on multiple voting rights and its de minimis approach at the EU level. We acknowledge that a multiple voting rights option would benefit SME companies. However, we also see merit in extending this option to regulated markets.