In late 2017 the European Commission launched a consultation on the creation of a proportionate regulatory environment to support SME IPOs. AMAFI stressed the importance of removing certain obstacles to the listing of SMEs, stemming primarily from administrative constraints. It also insisted on the importance of letting national markets set the applicable rules in the various areas concerned as opposed to a single European regulation. This often proves counter-productive in an environment where it is particularly useful to take into account what are often significant specificities and differences between the markets in question (AMAFI / 18-12).
This applies in particular to liquidity contracts. In this respect, AMAFI was pleased to note that the Commission appears to be shifting towards the Europe-wide acknowledgement of the usefulness of these contracts. With the practices of Member States differing substantially, AMAFI stressed that liquidity contract regulation must absolutely be left in the hands of national regulators. It would be extremely harmful for French practices – by far the most extensive and oldest in the EU, and which works in a highly satisfactory manner as part of a regulatory framework established jointly by the AMF and market players – to be impacted by a single regulation failing to take stock of the experience and benefits of the existing practices of the French SME market.
In another area, central to the concerns of players dealing in Euro Private Placement transactions, AMAFI applauds the Commission for perceiving the need to exclude these transactions from the regulation on market soundings as provided for in the Market Abuse framework. Applying this regulation makes no sense for transactions in which investors are involved in the negotiation of the terms and conditions of the issue. Given its importance to the development of this market, AMAFI has focused emphatically on this issue in the last few months. As observed in a recent report on private debt placement in the EU, the Commission appears to have fully realised the importance of this issue, one that is not reserved purely to SMEs.
Concerning the definition of SMEs, AMAFI once again argued that the current threshold of €200 million in capital was inappropriate and that it should be raised to at least €1 billion. However, mindful that the diversity of the markets in the Union makes a single approach difficult from a political standpoint, AMAFI proposed giving each Member State, in cooperation with its local growth SME markets, the flexibility to determine the SME threshold, in line with the option provided for in the Prospectus Regulation whereby each country is free to define the prospectus threshold at national level.
Lastly, and while this aspect was curiously absent from the discussions, AMAFI reiterated that financial analysis is vital to enabling SMEs to effectively access market financing