Response to the review of the Prospectus Directive
When companies reach a stage in their development at which a public listing becomes an option it is critical that these issuers have options which are tailored to their conditions. Many FESE Members offer both Regulated Markets and Multilateral Trading Facilities (MTFs) options to companies seeking access to capital through a public market listing. A listing on the Regulated Market requires compliance by the issuer with a full set of disclosure requirements as mandated by the Prospectus, Transparency and Market Abuse frameworks as well as adoption of full IFRS.
As an alternative, listing on MTF markets generally requires no / or a simplified disclosure document in terms of admission to trading and provides issuers (among other things) with the flexibility to opt for either local GAAP or full IFRS. Issuers can choose the market they want to list on taking into consideration the (ongoing) requirements for such listing and the investors’ base. Once listed on these MTFs, there is always the option for an issuer to move to the main Regulated Market at the appropriate stage of its development. FESE strongly believes that this flexibility should be maintained within the prospectus regime indicators, European markets fail to catch up with their peers from the Americas or Asia. Out of the top 26 IPO markets, only six of them are from the EU (another two from the rest of Europe), and none of them in the top five. In addition to the negative implications for economic recovery, these are also worrying indicators for Europe’s global economic power.
As the operators of Europe’s Regulated Markets, FESE members believe that a fundamental reorientation of European policies is needed to serve the original goals of the Single Market better at this current point in time. A re-orientation is critical to achieving the objectives of “Europe 2020”, the EU’s growth strategy for the current decade. Significant progress has been made, especially in terms of regulation (where rightly a lot of focus has been post-crisis). However, it will be crucial that the Capital Markets Union helps to move the pendulum towards more market orientation. FESE considers that more financing through capital markets helps achieve not just greater amounts of financing but also higher levels of innovation, efficient risk management, savings mobilisation, wealth distribution and job creation – which would serve the Union’s 2020 objectives on employment, innovation, education, social inclusion and climate / energy.