The European Commission published a consultation paper in which it seeks views on the main challenges for SME-dedicated markets and possible changes to EU legislation that might help build the EU high-growth SME markets. The consultation paper follows previous consultations and papers relating to the Capital Markets Union Action Plan.

The consultation focuses on SME Growth Markets, a new type of trading venue introduced under the Markets in Financial Instruments package (MiFID II). The consultation paper is split into two sections, the first of which considers the main drivers behind the downward trend of SME initial public offerings and bond issuances. The second section considers specific regulatory barriers to SME markets, small issuers and the local ecosystems surrounding SME markets. In particular, the Commission is seeking views on the MiFID II provisions which set the scope of SME Growth Markets, the market requirements for SME issuers to be assisted by a key adviser, delisting rules on SME Growth Markets and transfer of listings.

In addition, the consultation paper considers whether steps can be taken to alleviate the administrative burden on SME Growth Market issuers, including assessing some of the requirements in MAR relating to management transactions, insider lists, disclosure of inside information, reporting obligations and market soundings. The discussion on the local ecosystems around SME Growth Markets focuses on the "tick size" regime under MiFID II, the possibility of creating a liquidity provision contract across the EU (as an accepted market practice under MAR). It also covers the merits, if any, of free float requirements for SMEs, regulatory barriers to institutional investments in SME shares or bonds listed on SME Growth Markets and credit assessments and ratings for SME bond issuers.

Responses to the consultation are requested by 26 February 2018.

European Parliament and Council Reach Agreement on Proposal to Amend Fourth Anti-Money Laundering Directive

On 15 December 2017, the EC announced that the European Parliament and the Council of the European Union had reached political agreement on the Commission's proposal to amend the Fourth Anti-Money Laundering Directive (4AMLD).

The proposed changes include:

  • compulsory disclosure of certain information on beneficial owners of companies and business-related trusts;
  • improved access to beneficial ownership information;
  • requirement to identify beneficial owners who hold 10% ownership in certain companies which present a specific risk of being used for money laundering and tax evasion (the current threshold level for these purposes is 25%); and
  • direct interconnection of national beneficial ownership registries.

On 19 December 2017, the political agreement between the Council of the European Union and the European Parliament on the draft text of the proposed Fifth Anti-Money Laundering Directive (5AMLD) was announced.

The 5AMLD can be accessed in full here:

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