Response to ESMA on SME Growth Markets

SME Growth Market (SME GM) is a trading venue created under MiFID II/MiFIR to facilitate access to capital for SMEs. FESE considers that the more proportionate rules for SME GMs adopted in 2019 are a step in the right direction but that more tangible benefits should be created to promote the use of SME GMs. The revision of the prospectus rules was a very important step to reduce costs and burdens for companies whilst improving their access to financing.

While the intention of SME GMs was to attract smaller companies to listing, FESE members indicate that there is no real increase in interest from issuers to list on an SME GM compared to a Multilateral Trading Facilities (MTFs). Promoting the SME GMs is challenging as the difference in requirements between it and an MTF is limited, with no clear distinction.

To deliver on the policy objective, there should be further benefits for the SME GM label. It is important to find a balance between maintaining a liquid and trusted market with reduced burdens for issuers and adequate levels of investor protection. SME GMs should retain a certain level of flexibility whilst ensuring efficiency and integrity. Attracting SMEs to the market is crucial and can be done by firstly, supporting local eco-systems that would generate conditions for listing of companies and secondly by enabling cross-border listings for issuers.

EU policies can make a difference in preventing a further loss of the local and regional ecosystems by sustaining the full spectrum of players serving smaller companies and their investors. They also need to deliver a comprehensive strategy on how to boost equity and non-equity financing at all stages of the funding escalator. SME GMs have the potential to develop an ecosystem across the EU that benefits smaller issuers, enabling them to raise money, grow, create employment and wealth for investors and wider society.