SME listing on public markets

What the EU is doing and why

Broadening access to market-based sources of financing for European companies at each stage of their development is at the heart of the capital markets union (CMU).

Listing on stock exchanges can give a significant boost to small and medium enterprises (SMEs). The benefits of listing include a reduced dependence on bank funding, a higher degree of diversification of investors, easier access to additional equity capital and debt finance and a higher public profile and brand recognition.

Despite the benefits of stock exchange listings, EU public markets for SMEs are currently struggling to attract new issuers. Europe is producing only half of the SME initial public offerings that it generated before the financial crisis.

• On the supply side, issuers face high compliance costs to list on public markets
• On the demand side, insufficient liquidity can weigh on issuers (due to higher costs of capital), on investors (who can be reluctant to invest in SMEs in the first place due to low liquidity levels and related volatility risks) and on market intermediaries (whose business models rely on customers order flow in liquid markets)

The 'SME growth market', a new type of multilateral trading facility, was introduced by MiFID II to improve SMEs' access to market-based finance. The regime of the ‘SME growth market’ has been enhanced through several legislative initiatives since its creation (SME Listing Act and the listing package).

Relevant legislation

Related links

Technical Expert Stakeholder Group (TESG) on SMEs