Business competitiveness and attractiveness
For months, AMAFI has been stressing the need to consider the competitiveness of European firms and the attractiveness of the regulatory framework in connection with the reboot of the Capital Markets Union (CMU) initiative and in view of the challenge represented by Brexit for the organisation of EU markets (AMAFI / 21-38). A delegation led by AMAFI Chairman Stéphane Giordano met with Verena Ross, Chair of the European Securities and Markets Authority (ESMA), on 19 January to discuss two central issues in this regard, namely reforming ESMA (AMAFI / 21-41) and the MiFID II/ MiFIR review (AMAFI / 21-31).
Addressing the first point, Ms Ross emphasised the challenges involved in incorporating competitiveness in ESMA’s mandate, underlined the value to ESMA of having powers to issue no-action letters similar to those enjoyed by the SEC and CFTC, and stressed her desire to step up interactions between ESMA and the industry.
Regarding the MiFIR review, she noted ESMA's considerable interest in the creation of a consolidated tape, while highlighting the challenges involved in striking the right balance between transparency and liquidity in the transparency regime for non-equity markets. On the derivatives trading obligation (DTO), she expressed support for the notion that suspension of the DTO for participants from one Member State could be extended to firms in other EU countries provided they meet the same criteria. Regarding the potential banning of inducements, she stressed the wide variety of situations in different Member States, with some authorising inducements and others prohibiting them.
SME Financing – Listing Act
The consultation on the Listing Act launched by the European Commission in late 2021 is intended to make listing on European capital markets more attractive for companies and simpler for small and mid-sized enterprises (SMEs). The idea is to make it easier for companies to access capital markets, while preserving a high level of investor protection. This goal is shared by the CMU initiative.
Among the issues raised, AMAFI feels that it is important to promote liquidity and hence to maintain high investor disclosure standards, promote research, including sponsored research, and preserve liquidity contracts. While it may be that the legislation lacks sufficient subtlety to cater to different issuer sizes or fund-raising amounts, making it more cumbersome for smaller companies, the attractiveness of European markets depends on a whole ecosystem and cannot be reduced solely to a legislation issue.
The consultation includes questions about the prospectus, prevention of market abuse and MiFID. AMAFI is readying its response, which must be submitted by 11 February, via an ad hoc group, in partnership with other industry associations, including groups representing issuers.
