Listing Package: EU's 2024 Trilogue Agreement
In February 2024, the EU plenary adopted the Listing Package, aiming to simplify listing rules, reduce costs, and protect investors. Amendments also grant flexibility to investment firms in organizing payment for services.
Following a trilogue agreement with the Council, the Listing Package recommendations were accepted by the European Union's plenary session in February 2024, marking an important milestone. The Commission first unveiled the Listing Package in December 2022 with the intention of streamlining the intricate EU listing requirements. With the goal of providing a fair balance between regulatory requirements and compliance costs for both prospective and existing listed companies, this comprehensive agreement sought to expedite the listing process. It also sought to maintain market integrity and protect investors' interests.
In addition, the agreement involved modifications to the guidelines pertaining to third-party providers of investment research. These modifications were intended to provide investment firms more control over how they arranged their financial operations by giving them more leeway in controlling the fees for research and execution services. All things considered, this move signified a deliberate attempt to improve the competitiveness, efficiency, and transparency of the financial markets in the EU.
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Alessandro Micagni
EU Negotiators Reach Accord to Simplify Listing Process and Boost Market Access
The agreement is a big step toward opening up the EU stock markets to greater business interest and accessibility. It was reached after discussions between the Council and the Economic and Monetary Affairs Committee. The agreement intends to boost investment opportunities, support entrepreneurship, and stimulate innovation throughout the continent by lowering regulatory costs and streamlining the listing process. In the end, this project demonstrates the EU's dedication to creating a vibrant and competitive financial environment, guaranteeing that businesses of all sizes may prosper while upholding the honesty and trust of market participants.
Investment Research Improvement: Amendments to MIFID Directive
The Markets in Financial Instruments Directive (MIFID) will be amended with an emphasis on improving third-party investment research availability, according to the agreement reached by negotiators. The objective of this effort is to enhance the visibility of listed firms and rejuvenate the market for investment research. The reforms emphasize openness and conflict-of-interest management while giving investment firms more leeway in how they arrange compensation for research and execution services. The following are the agreement's main points:
- Flexibility for Investment Firms: The modifications provide investment firms more leeway in determining how to arrange compensation for research and execution services. Because of this flexibility, businesses can modify their payment plans to better fit their clientele's demands and business models.
- Requirements for Transparency: Investment firms must be open and honest about how they pay for services and outside research. They have to disclose to their clients whether they use joint or separate payments and provide an account of the steps they've taken to avoid or handle conflicts of interest.
- Client Consideration: Companies must determine if the investing research they offer enables their clients to make wise financial decisions. By ensuring that research services are in line with client needs and interests, this need improves the value proposition for investors.
In general, these changes are meant to encourage investment research providers to be more open, responsible, and client-focused, which will eventually lead to the development of a stronger and more reliable financial ecosystem.
Simplified Prospectus Regulations: Key Changes
A major step in simplifying the process of creating and distributing prospectuses for securities sold to the public or traded on regulated markets has been taken by negotiators who have recently struck a tentative agreement to restructure the Prospectus regulation. The main goals of these changes are to standardize regulations, with a particular emphasis on cutting expenses and improving accessibility for investors.
Among the most important adjustments is the adoption of a uniform prospectus format. Issuers can minimise associated compliance expenses by streamlining the preparation process through the establishment of a consistent framework. In addition, negotiators have emphasised how crucial it is to provide pertinent information in prospectuses so that investors may obtain the crucial information they need to make educated investment decisions. The modifications highlight the use of straightforward language appropriate for the particular audience that the prospectus is intended for in order to encourage better understanding among investors.
The Market Abuse Regulation (MAR) and the Markets in Financial Instruments Regulation (MiFIR) have also been amended, in addition to the prospectus regulations being made simpler. The objectives of these modifications are to improve market integrity and fortify the legal structure that oversees intermediaries and securities markets. Policymakers aim to promote investor trust and streamline capital raising activities by augmenting openness and regulatory monitoring. This eventually contributes to the stability and competitiveness of the financial markets.
Establishing Common Rules for Multiple-Vote Share Structure: Co-Legislators' Agreement
Following much discussion, co-legislators have agreed upon standard rules controlling the multiple-vote share structure (MVSS) for businesses looking to list their shares on MTFs (multilateral trading facilities) and SME growth markets. Ensuring fair treatment of shareholders and protecting the interests of those without multiple-vote shares are made possible in large part by this agreement. The structure outlined in the agreement is summed up in the following major points:
- Required Safeguards: Co-legislators have required that businesses that use a multiple-vote share structure put in place safeguards. Ensuring equitable and non-discriminatory treatment for shareholders, especially those without multiple-vote shares, is contingent upon the implementation of these measures. The agreement seeks to preserve openness and safeguard each shareholder's interests by enforcing these procedures.
- Transparency Requirements: Businesses that use a multiple-vote share structure are required to publish pertinent information about their share arrangement in order to foster transparency and educate prospective shareholders. By requiring this, the company may make sure that potential investors are fully aware of its corporate governance policies, including any clauses pertaining to multiple-vote shares.
All things considered, the consensus on standard guidelines for the multiple-vote share structure is a big step in the right direction toward improving accountability, transparency, and shareholder protection for businesses listed on MTFs and SME growth markets. Co-legislators want to create equal opportunities and investor confidence in the financial markets by requiring safeguards and requiring transparency.
Alfred Sant's Statement on EU Negotiations: A Reflection on Recent Developments
The comments made by Alfred Sant clarified the difficulties and complexity that arose during the EU discussions, especially with respect to the rule on multiple voting share structures. While there has been progress on a number of the Listing Act package's directives, the overall objective of preserving the capital markets union project's momentum is threatened by differences over specific directives. Stakeholders need to work toward agreement during the ongoing negotiations to make sure EU funding projects are advanced in a coordinated way.
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