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SME listing on public markets

EU initiatives to make it easier for SMEs to raise capital on public markets.


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).

Regulatory initiative to promote SME growth markets

In May 2018 the European Commission proposed to adopt more proportionate rules to support SME listing while safeguarding investor protection and market integrity. The initiative is confined to “SME growth markets”, a new category of multilateral trading facilities created by the Markets in financial instruments directive (MiFID II) as of January 2018 to facilitate access to capital for SMEs.

The initiative includes two texts

The new rules proposed by the Commission aim to

  • reduce the administrative burden and the high compliance costs faced by SME growth market issuers while ensuring a high level of market integrity and investor protection
  • foster the liquidity of publicly listed SME shares to make these markets more attractive for investors, issuers and intermediaries
  • facilitate the registration of multilateral trading facilities as SME growth markets

In April 2019, the European Parliament endorsed the legislation setting the building blocks of a capital markets union, including the SME growth markets proposal.