MEPs called for removing barriers and simplified rules to allow SMEs, mid-caps and start-ups access to financial markets in a non-binding report adopted on Thursday.
In their report, MEPs call for the development of the Capital Markets Union (CMU) to be accelerated, arguing that this would be a viable way for fund deprived companies to tap into financial markets and reduce their reliance on bank lending.
To this end, MEPs proposed several targeted changes aligning and simplifying the existing provisions concerning for example capital requirements, reporting frameworks or listing requirements for SMEs regarding Initial Public Offerings. They also call for an acceleration of the development of the EU venture capital and private equity markets to increase transparency and reduce fragmentation. At the same time, the report stresses that adequate prudential rules for loss absorption capacity are fundamental.
MEPs also suggest that the Commission should come forward with several legislative proposals, including a proposal on 'European Secured Notes' (ESNs), as a new dual-recourse funding instrument for banks, which could help improve access to financing for SMEs across the EU, or a European Single Access Point for financial and non-financial information in respect to listed and unlisted EU companies.
MEPs point out that the CMU requires a developed investor base with suitable investment options for retail investors paired with the improved disclosure and comparability of key information. They call for a more horizontal, harmonised, approach to consumer and investor protection in the EU financial services legislation, adapted to the green and digital transformation, in order to ensure effective and consistent levels of protection across all financial products and providers.
Finally, the adopted text highlights that the CMU should be a key contributor to the transition towards a sustainable, competitive and resilient economy complementing public investment, and in line with the EU Green Deal. The text also points out that Europe competes for capital in a global market therefore efficient and resilient European capital markets are critical to protecting Europe’s economic sovereignty.
The report was adopted with 37 votes to 10.