Listing Act – Investment research

The Listing Act package, which aims to make it easier for companies to list in the EU, is currently under negotiation in the European Parliament and is expected to be finalised by the year's end.

In early July, AMAFI submitted proposed amendments to the Parliament's draft report (AMAFI / 23-56), particular in relation to the requirements for preparing prospectuses, multiple voting rights and some of the modifications to the Market Abuse Regulation. Investment research is a major focus area for AMAFI in this context.

Acknowledging that MiFID II adversely impacted funding for SME and mid cap research, the Listing Act proposes to amend the directive in two ways:

First by recognising sponsored research, i.e. research that is entirely or partly paid for by the issuer, as investment research in its own right, provided that it complies with a code of conduct. AMAFI welcomes this development, which draws heavily on the French model introduced following the publication in May 2021 of the AMAFI-AFG-SFAF charter on sponsored research.

However, whereas the European institutions would like ESMA to draw up the code of conduct, AMAFI is recommending that, at least initially, individual member states take on the task, based on guidance from ESMA. This would ensure that the specific features of each market, which remain significant in the case of SME and mid tier capital markets, are accommodated.

Another proposal is to raise the capitalisation threshold below which trading and research fees may be bundled. The level is currently set at EUR 1 billion, and several thresholds have been put forward, ranging up to EUR 10 billion. While AMAFI is extremely doubtful about the effectiveness of this measure, it believes that EUR 5 billion would be an appropriate threshold, as this would most accurately match the SME/mid cap segment according to investors.

An AMAFI delegation led by Chairman Stéphane Giordano met with Salvatore Gnoni, head of ESMA's Investor Protection Unit, to talk about this issue. AMAFI highlighted the major role played by sponsored research in compensating for the post-MiFID II downturn in SME/mid cap research coverage. The delegation also reviewed the principles underpinning France’s charter on sponsored research. While AMAFI stressed the importance of a local approach, Salvatore Gnoni argued that the goal of harmonisation should take precedence.