Government Affairs

Government Affairs covers our public positions on regulatory and supervisory issues. Issues that may impact on our markets

Euronext engages in both EU and relevant domestic regulatory and policy-making processes. Our aim is to secure balanced regulatory & supervisory outcomes. This should strengthen the role our markets play in the financing of the real economy across the EU.

Listings

SME Growth Markets

Under the Capital Markets Union project (CMU), and in order to support jobs and growth in the EU, the European Commission has set in motion several legislative and non-legislative initiatives aimed at strengthening public capital markets financing for SMEs and midcaps over the last several years.

In 2018, the European Commission published legislative proposals to build upon the creation of ‘SME Growth Markets’ in MiFID II. This follows from an industry consultation at the end of 2017 on potential proposals for targeted amendments to MiFID II, the Prospectus Regulation and the Market Abuse Regulation (MAR) to strengthen the attractiveness of these markets for SMEs and midcaps. As the operator of Growth Markets across its jurisdictions, Euronext is greatly supportive of such initiatives.

Euronext’s position on the EU SME Growth Markets initiatives

On May 24th 2018 the European Commission published proposals to amend the MiFID II, Prospectus and Market Abuse Regulations’ Frameworks in order to introduce further regulatory alleviations for all companies listed on SME Growth Markets.

Euronext welcomes and supports these initiatives. It is however our experience that, while many themes are shared across countries and markets, there are important differences and nuances which require flexibility in the regulatory and supervisory approach. This is critical to enabling implementation of tailored solutions that meet the specific needs of SMEs and midcap public capital markets.

While Euronext is supportive of legislative amendment in many of the areas identified by the Commission, we believe it is important that policymakers and regulators embed this core principle in any EU legislation seeking to improve the attractiveness of EU Growth Markets for SMEs and midcaps.

As an example, we believe the legislative changes should go further in ensuring that bond-only issuers also benefit from the proposed alleviations, particularly when it comes to the Market Abuse Regulation (MAR) where the majority of requirements are tailored for equity markets.

In the aim of developing a regulatory framework supporting access to public markets for all SMEs, Euronext makes proposals to adapt definitions in the Prospectus Regulation and a number of requirements in the MAR framework to bond-only issuers.

Our detailed proposals can be accessed above.

In December 2017, as part of the preparation of the legislative proposals, the European Commission published a consultation on potential measures to strengthen the attractiveness of MIFID II’s SME Growth Markets, with a view to introducing targeted amendments to the relevant EU regulatory frameworks.

A detailed summary of the Euronext response to the consultation can be accessed above. The paper notably includes a comprehensive overview of the challenges faced by public markets for SMEs across the Euronext jurisdictions.

Downloads

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Public consultation on building a proportionate regulatory environment to support SME listing

English Versie

English 18/04/2019 Public consultation on building a proportionate regulatory environment to support SME listing /sites/default/files/2019-04/european_commission_consultation_document_1.pdf
  • PDF

EU SME Growth Markets Consultation - Euronext Position Paper

English Versie

English 18/04/2019 EU SME Growth Markets Consultation - Euronext Position Paper /sites/default/files/2019-04/eu_sme_growth_markets_consultation_-_euronext_position_paper_0.pdf
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Commission Amendments to the Delegated Acts under MiFID II – Euronext Position Paper

English Versie

English 18/04/2019 Commission Amendments to the Delegated Acts under MiFID II – Euronext Position Paper /sites/default/files/2019-04/enx_position_on_level_ii_sme_gm_amendments__0.pdf
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Euronext Position Paper on the EU SME Growth Markets Initiatives

English Versie

English 18/04/2019 Euronext Position Paper on the EU SME Growth Markets Initiatives /sites/default/files/2019-04/enx_position_on_sme_growth_markets__0.pdf

More details on the

Euronext Growth markets

Indices

EU Benchmarks Regulation (BMR)

The EU Benchmarks Regulation, applicable as of January 2018, provides the basis for the regulation and supervision of benchmark administration in the EU. BMR provides a set of different regulatory frameworks to accommodate the full range of benchmarks present in the market. This is achieved via a categorisation of benchmarks into non-significant, significant and critical categories.

Moreover, the EU legislator also introduced a category covering Regulated-Data Benchmarks to reflect the fact that benchmarks based on regulated data (i.e. data from regulated trading venues) are less prone to manipulation as the input data is already subject to stringent pre and post trade rules in EU legislation (notably MiFID II and MAR).

Euronext supports the broad policy objectives underpinning the new EU framework. At the same time, Euronext has been obliged to avail itself of the transitional provision that BMR provides to existing benchmark providers until Jan 2020. The reason for this is that there are ongoing issues with key definitions in the legislation impacting on the applicability of the regime for Regulated-Data Benchmarks.

BMR defines Regulated-Data Benchmarks as benchmarks based on input data which comes ‘entirely and directly’ from (amongst other sources) trading venues, as defined by MiFID.

Today, benchmark administrators often obtain data from trading venues via market data providers that provide the technical link between the venue and administrator without making any alterations to the unprocessed data. In our view, such practices should be deemed to fall within the scope of a Regulated-Data Benchmark, specifically meeting the requirement for the data to be taken ‘entirely and directly from the trading venue’ so long as the data is provided in a raw and unprocessed state.

The Euronext position paper provides more details on the issue as well as outlining proposals for clarification at Level 2.

Downloads

  • PDF

Euronext Position Paper on Benchmarks Regulation – Regulated data benchmark

English Versie

English 18/04/2019 Euronext Position Paper on Benchmarks Regulation – Regulated data benchmark /sites/default/files/2019-04/enx_benchmark_position_may_2018_final_0.pdf

Equities

Systematic Internalisers and Tick Sizes (MiFID II)

Following the entry into force of MiFID II and associated increase in systematic internalisers (SIs) reported volumes, EU policymakers’ attention has focused on the non-application of the tick size regime to SIs and the implications of this exemption for the effectiveness of EU public equities markets.

In the context of the Investment Firm Review (IFR), amendments have been tabled in the European Parliament to extend the application of tick sizes to SIs.

In light of these developments, Euronext calls on EU policymakers to ensure a level playing field between trading venues and SIs and supports applying the tick size regime to SI and trading venue activity up to large-in-scale (LIS).

Policymakers’ attention is currently focused on the non-application of the tick size regime to SIs and the implications of this exemption for the effectiveness of EU public equities markets. This concern has been translated into a proposed amendment from the European Parliament to extend the tick size regime to SIs in the context of the Investment Firm Reform (IFR). With the Council having recently adopted its position on the IFR proposals, Euronext believes it is timely to consider some issues of relevance to the ongoing trialogue discussions.

Euronext believes that it is acceptable for large-in-scale (LIS) trades executed on SIs and Trading Venues, and trades that are non-price forming, to be exempt from the tick size regime. In particular:

  • A level playing field should exist between trading venues and SIs. Euronext supports extending the tick size regime to SIs up to LIS, recognising the fact that over applying the tick size regime may raise issues in respect of above LIS transactions. Above LIS, if SIs are exempted from applying tick sizes, then so should Trading Venues.

  • MiFID II recognises that non-price forming trades (regardless of the size) may be exempted from tick sizes because they are not subject to the shares trading obligation. As such, these trades are still allowed for OTC execution and not subject to any tick size requirement when executed OTC.

Downloads

  • PDF

Euronext Position Paper on EXTENSION OF THE TICK SIZE REGIME TO SYSTEMATIC INTERNALISERS (SIs)

English Versie

English 18/04/2019 Euronext Position Paper on EXTENSION OF THE TICK SIZE REGIME TO SYSTEMATIC INTERNALISERS (SIs) /sites/default/files/2019-04/Extension%20of%20the%20tick%20size%20regime%20to%20SIs%20-%20FINAL_0.PDF

Contacts

Government Affairs team

EUGA@euronext.com