The European Commission has published a consultation paper in which it seeks views on the main challenges for SME-dedicated markets and possible changes to EU legislation that might help build the EU high-growth SME markets. The consultation paper follows previous consultations and papers relating to the Capital Markets Union Action Plan.

The consultation focuses on SME Growth Markets, a new type of trading venue introduced under the Markets in Financial Instruments package. The consultation paper is split into two sections, the first of which considers the main drivers behind the downward trend of SME initial public offerings and bond issuances. The second section considers specific regulatory barriers to SME markets, small issuers and the local ecosystems surrounding SME markets. In particular, the Commission is seeking views on the MiFID II provisions which set the scope of SME Growth Markets, the market requirements for SME issuers to be assisted by a key adviser, delisting rules on SME Growth Markets and transfer of listings. 

In addition, the consultation paper considers whether steps can be taken to alleviate the administrative burden on SME Growth Market issuers including assessing some of the requirements in the Market Abuse Regulation relating to management transactions, insider lists, disclosure of inside information, reporting obligations and market soundings. The discussion on the local ecosystems around SME Growth Markets focuses on the "tick size" regime under MiFID II, the possibility of creating a liquidity provision contract across the EU (as an accepted market practice under MAR). It also covers the merits, if any, of free float requirements for SMEs, regulatory barriers to institutional investments in SME shares or bonds listed on SME Growth Markets and credit assessments and ratings for SME bond issuers. 

Responses to the consultation are requested by February 26, 2018. 

View the consultation paper.