Final Draft EU Technical Standards for SME Growth Markets Under Market Abuse Regulation

The European Securities and Markets Authority has published its final report and final draft Technical Standards on the amendments to the Market Abuse Regulation for the promotion of SME Growth Markets. SME Growth Markets were a new sub-category of multilateral trading facility introduced by the revised Markets in Financial Instruments package in January 2018 to facilitate access to capital for SMEs. ESMA is mandated to prepare: (i) Regulatory Technical Standards on liquidity contracts; and (ii) Implementing Technical Standards on insider lists and to submit those to the European Commission by September 1, 2020. Due to the impact of the COVID-19 pandemic, the delivery of the final draft RTS and ITS have been delayed and ESMA acknowledges that it is unlikely that they will be adopted in time for the application of the amendments to MAR, which is January 1, 2021. The final report outlines ESMA's proposals and provides the final draft RTS and ITS that ESMA has submitted to the European Commission for consideration.

MAR provides certain prohibitions against market manipulation. Accepted market practices, which are established by national regulators and notified to ESMA, provide a defence against any allegations of market manipulation. In particular, a dealing on a financial market that was carried out for legitimate reasons and in line with an established AMP, will not be found to constitute market manipulation. Recent revisions to MAR established a safe harbour for liquidity contracts, provided that certain conditions are met. The safe harbour for liquidity contracts will co-exist with existing and any future AMPs. However, it is only available for shares. The final draft RTS on liquidity contracts sets out the requirements relevant for the template liquidity contract in the body of the RTS and annexes the proposed template and provides that:

• currencies other than the Euro should be provided for;
• the liquidity account must be opened in the name of the issuer;
• large trades in accordance with the MiFID II package should benefit from the protections provided by the liquidity contract provided they are executed on venue and take place in exceptional situations; and
• the specified information must be published on the issuer's website.

The final draft ITS on the format of insider lists is for use in EU member states that require SME Growth Market issuers to include all insiders, not only those with regular access to inside information. MAR imposes an obligation on issuers, emission allowance market participants, auction platforms, auctioneers and auction monitors, or any person acting on their behalf, to create and maintain insider lists and related ITS set out the template for those lists. To reduce the burden on SMEs, a derogation was introduced to allow SME Growth Market issuers to have insider lists for only those individuals with regular access to inside information. However, Member States are able to require SME Growth Market issuers to hold lists for anyone with access to inside information when justified by specific national market integrity concerns. ESMA is proposing an insider list template that meets the latter requirement and also reduces the burden on SMEs, including by reducing the number of fields. ESMA notes that although the reduction in the number of fields is limited, this list for SME Growth Market issuers should still simplify the process of creating and maintaining insider lists and therefore reduce the administrative burden of those operating within SME growth markets.

View ESMA's final report and the final draft RTS and ITS.

Return to main website.