Changes from report parliamentary committee draft to plenary report

RemovedDirective 2014/65/EU

Added2022/0405 (COD)

RemovedArticle 1 – paragraph 1 – point 2 – point a, Article 24 – paragraph 3b – subparagraph 1: Where the research is paid, fully or partially, by the issuer and disseminated to the public or to investment firms or to the clients of investment firms providing portfolio management or other investment or ancillary services, such research shall be labelled as “issuer-sponsored research” provided that it is produced in compliance the EU code of conduct for issuer-sponsored research to be developed by ESMA.

AddedProposal for a

RemovedDirective 2014/65/EU

AddedDIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

RemovedArticle 1 – paragraph 1 – point 2 – point a, Article 24 – paragraph 3b – subparagraph 2: ESMA shall develop draft regulatory technical standards to establish a harmonised EU code of conduct for issuer-sponsored research. The code of conduct shall set out minimum standards of independency and objectivity to be complied with by the providers of such research, and specify procedures for the effective identification and prevention of conflicts of interest. / ESMA shall submit those draft regulatory technical standards to the Commission by ... [12 months after the date of entry into force of this Directive]. / Power is delegated to the Commission to adopt the regulatory technical standards referred to in the second subparagraph of this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010. / The EU code of conduct shall be made available to the public on ESMA’s website. / The competent authorities of Member States shall be given supervisory powers in order to ensure that investment firms comply with the requirements of the EU code of conduct developed by ESMA. The competent authorities of Member States shall have the necessary powers to do the following: / (a) check whether investment firms have in place the organisational measures to ensure that the issuer-sponsored research that they receive is produced in compliance with the EU code of conduct; / (b) suspend the distribution by investment firms of any issuer-sponsored research that is not produced in compliance with the EU code of conduct; / (c) issue warnings to inform the public that the …

Addedamending Directive 2014/65/EU to make public capital markets in the Union more attractive for companies and to facilitate access to capital for small and medium-sized enterprises and repealing Directive 2001/34/EC

RemovedDirective 2014/65/EU

RemovedArticle 1 – paragraph 1 – point 2 – point a, Article 24 – paragraph 3d: 3d. Research that is labelled as issuer-sponsored research shall indicate on its front page in a clear and prominent way that it has been prepared in accordance with a code of conduct. Any other research material paid fully or in part by the issuer but not produced in compliance with a code of conduct as referred to in paragraph 3b shall be labelled as marketing communication.;

AddedTHE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

RemovedDirective 2014/65/EU

AddedHaving regard to the Treaty on the Functioning of the European Union, and in particular Article 50, 53(1) and 114 thereof,

RemovedArticle 1 – paragraph 1 – point 2 a (new) – point a (new), Article 27 – paragraph 1 – subpagragh 1: (2a) Article 27 is amended as follows: / (a) in paragraph 1, the first subparagraph is replaced by the following: / ‘1. Member States shall require that investment firms take all sufficient steps to obtain, when executing orders, the best possible result for their clients taking into account price, costs, speed, likelihood of execution and settlement, size, nature, the provision of research, or any other consideration relevant to the execution of the order. Nevertheless, where there is a specific instruction from the client the investment firm shall execute the order following the specific instruction.’

AddedHaving regard to the proposal from the European Commission,

RemovedDirective 2014/65/EU

AddedAfter transmission of the draft legislative act to the national parliaments,

RemovedArticle 1 – paragraph 1 – point 2 a (new) – point b (new), Article 27 – paragraph 7: (b) paragraph 7 is replaced by the following: / ‘7. Member States shall require that a financial instrument of an issuer which is admitted to trading on an SME growth market may also be traded on another trading venue only if the issuer has been informed and has given its consent.’

AddedHaving regard to the opinion of the European Economic and Social Committee,

RemovedDirective 2014/65/EU

AddedActing in accordance with the ordinary legislative procedure,

RemovedArticle 1 – paragraph 1 – point 4, Article 51a – paragraph 4: 4. Member States shall require that regulated markets ensure that at least 10% of the subscribed capital represented by the class of shares concerned by the application for admission to trading is held by the public at the time of admission.

AddedWhereas:

RemovedDirective 2014/65/EU

Added(1) Directive 2014/65/EU of the European Parliament and of the Council has been amended by Regulation (EU) 2019/2115 of the European Parliament and of the Council, which introduced proportionate alleviations to enhance the use of SME growth markets and to reduce the excessive regulatory requirements for issuers seeking admission of securities on SME growth markets, while preserving an appropriate level of investor protection and market integrity. However, to streamline the listing process and to render the regulatory treatment of companies more flexible and proportionate to their size, further amendments to Directive 2014/65/EU are necessary.

RemovedArticle 1 – paragraph 1 – point 4, Article 51a – paragraph 5: 5. Member States shall deem sufficient the number of shares distributed where either: / (a) the shares in respect of which an application for admission has been made are held by the public to the extent of at least 10 % of the subscribed capital represented by the class of shares concerned; or / (b) in view of the large number of shares of the same class and the extent of their distribution to the public, the market can operate properly with a lower percentage.

Added(2) Directive 2014/65/EU and Commission Delegated Directive (EU) 2017/593 set out the conditions under which the provision of investment research by third parties to investment firms providing portfolio management or other investment or ancillary services is not to be regarded as an inducement. In order to foster more investment research on companies in the Union, in particular small and medium capitalisation companies, and to bring those companies greater visibility and more prospect of attracting potential investors, it is necessary to introduce▌ amendments to that Directive.

RemovedDirective 2014/65/EU

Added(3) The provisions concerning research laid down in Directive 2014/65/EU require investment firms to separate payments which they receive as brokerage commissions from the compensation perceived for providing investment research (‘research unbundling rules’), or to pay for investment research from their own resources and assess the quality of the research they purchase based on robust quality criteria and the ability of such research to contribute to better investment decisions. In 2021, those rules have been amended by Directive (EU) 2021/338 of the European Parliament and of the Council to allow for bundled payments for execution services and research for small and medium capitalisation companies below a market capitalisation of EUR 1 billion. The decline of investment research has, however, not slowed down.

RemovedArticle 1 – paragraph 1 – point 4 a (new), Article 69 – paragraph 2 – point u a (new): (4a) In the first subparagraph of Article 69(2), the following point is added: / (ua) supervise whether investment firms that produce or distribute issuer-sponsored research do so in compliance with the EU code of conduct developed by ESMA as referred to in Article 24.

Added(4) Compared to larger firms, small and medium-sized enterprises (SMEs) continue to be characterised by a lower amount of analyst research, a higher probability of losing coverage, a lower quality of research and limited secondary market liquidity. In order to revitalise the market for investment research and to ensure sufficient research coverage of companies, in particular the small and medium capitalisation companies, ▌unbundling rules should be further adjusted. Investment firms should have more flexibility to choose the way in which they wish to organise the payments of execution services and research. However, doing so would require a level of transparency to be maintained vis-a-vis clients as to the payment choice made by investment firms. Investment firms should inform their clients whether they apply a separate or joint payment for execution services and the provision of third party research. Investment firms should ensure that clients receive appropriate information by keeping records of the charges attributable to research and execution services and also via the provision of an annual report on those payments to clients.

Added(4a) The adjustment of unbundling rules alone will not suffice to revitalise the market of research investment and address the longstanding shortage of research coverage of small and medium capitalisation companies. The measures introduced in this Directive should not undermine the progress made in terms of price transparency, reduction of conflicts of interest and other regulatory objectives of MiFID II. Further measures should be introduced to improve the coverage of SMEs and the promotion of independent research in the market.

RemovedThe Rapporteur welcomes the Commission’s proposal for the Listing Act and its designed overhaul of the current EU framework for company listings.

Added(5) In addition, to further support the coverage of small and medium capitalisation companies by investment research, research material paid fully or partially by issuers should be labelled as ‘issuer-sponsored research’. To ensure an adequate level of objectivity and independence of such research material, such material should be produced in line with a code of conduct developed or endorsed by ESMA by means of regulatory technical standards. For that purpose, investment firms should have in place governance and organisational procedures to ensure that the issuer-sponsored research they produce, use or distribute is produced in compliance with that code of conduct and with the requirements laid down in this Directive. Member States should ensure that competent authorities have all the necessary supervisory and investigatory powers to ensure that investment firms comply with those requirements. In order to support more visibility of the issuer-sponsored research, issuers should▌ submit their issuer-sponsored research to the relevant collection body as defined▌ in [Article 2 (2) ] of Regulation (EU) .../... of the European Parliament and the Council.

RemovedAs part of this proposal, a package of reviews to existing pieces of legislation is in front of us.

Added(6) Directive 2014/65/EU introduced the SME growth market category to increase the visibility and profile of markets specialised in SMEs and foster the development of common regulatory standards in the Union of markets specialised in SMEs. SME growth markets play a key function in facilitating access to capital for those smaller issuers by catering for their needs. To foster the development of such specialised markets and to limit the organisational burden for the operators of multilateral trading facilities (MTFs), it is necessary to allow the segment of a MTF to apply to become a SME growth market provided that such segment is clearly separated from the rest of the MTF.

RemovedThe Commission proposals comprise the following:

Added(6a) Member States should require that a financial instrument of an issuer which is admitted to trading on an SME growth market is able to be traded on another trading venue only if the issuer has been informed and has not objected. Shares in SMEs are often illiquid by nature as they have a smaller market capitalisation and a lower trading volume. Issuers should therefore be able to object to being traded on another trading venue, as that could reduce the risks of fragmentation of liquidity.

Removed A proposal to amend (i) the Prospectus Regulation to harmonise requirements for the drawing up, approval, and distribution of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market (2017/1129), (ii) the regulation on market abuse (MAR) aimed at preventing and detecting market abuse, market manipulation and insider dealing (596/2014), and (iii) the regulation on markets in financial instruments (MiFIR), which provides a legal framework for securities markets, investment intermediaries, and trading venues (600/2014);

Added(7) Directive 2001/34/EC of the European Parliament and of the Council lays down rules concerning listing on Union markets. That Directive aims at coordinating the rules on the admission of securities to official stock exchange listing and on information to be published on those securities to provide equivalent protection for investors at Union level. That Directive also lays down the rules of the regulatory and supervisory framework for Union primary markets. In the course of the years, Directive 2001/34/EC has been amended significantly several times. Directives 2003/71/EC of the European Parliament and of the Council and Directive 2004/109/EC of the European Parliament and of the Council have replaced most of the provisions harmonising the conditions for the provision of information regarding requests for the admission of securities to official stock exchange listing and the information on securities admitted to trading, and have made large parts of Directive 2001/34/EC redundant. Directive 2001/34/EC as a minimum harmonisation Directive gives Member States a rather broad discretion to deviate from the rules laid down in that Directive, which has led to market fragmentation in the Union. To drive market harmonisation at Union level and create a single rule book, Directive 2001/34/EC should be repealed.

Removed A proposal to amend the directive on markets in financial instruments, MiFID II, designed to regulate financial markets and improve protections for investors (2014/65/EU), and to repeal the Listing Directive coordinating the conditions for admission of securities to official stock exchange listings and the information to be published on those securities (2001/34/EC);

Added(8) Directive 2014/65/EU, like Directive 2001/34/EC, provides for the regulation of markets of financial instruments and strengthens investor protection in the Union. Directive 2014/65/EU also sets out rules on the admission of financial instruments to trading. By extending the scope of Directive 2014/65/EU to cover specific provisions from Directive 2001/34/EC will ensure that all relevant provisions from Directive 2001/34/EC are maintained. A number of provisions of Directive 2001/34/EC, including the requirements on free float and market capitalisation which still apply, are enforced by competent authorities and are considered important rules for seeking admission to trading of shares on regulated markets in the Union by market participants. It is therefore necessary to transfer those rules in Directive 2014/65/EU to set out, in a new provision of that Directive, specific minimum conditions for the admission to trading of shares on regulated markets. The application of that new provision should complement the general provisions on the admission of financial instrument to trading laid down in Directive 2014/65/EU.

Removed A proposal for a new directive on multiple-vote share structures in companies that seek the admission to trading of their shares on an SME growth market. The proposal aims to address the regulatory burden faced by companies during the phase preceding the initial public offering (IPO) and the imbalance across the EU when choosing appropriate governance structures when they list (2022/0406).

Added(9) To allow for more flexibility for issuers and to make Union capital markets more competitive, the minimum free float requirement should be decreased to 10%, which is a threshold that ensures for a sufficient level of liquidity in the market. The free float requirement laid down in Directive 2001/34/EC that a sufficient number of shares is to be distributed to the public in one or more Member States refers to the public within the Union and the European Economic Area (EU/EEA). That geographical restriction of the free float requirement to the EU/EEA should not be maintained as Directive 2014/65/EU does not provide for such restriction for financial instruments admitted to trading. The requirement that a company is to have published or filed its annual accounts for a specific period of time should not be transferred to Directive 2014/65/EU since Regulation (EU) 2017/1129 of the European Parliament and of the Council already contains a provision to that effect. Directive 2014/65/EU already lays down provisions to designate competent authorities. Thus, the provisions laid down in Directive 2001/34/EC to appoint one or more competent authorities are redundant. The requirement for debt securities that the amount of the loan is not be less than EUR 200 000 are considered obsolete in light of current market practice.

RemovedAs a general approach, the Rapporteur approves simplification and standardisation of the listing framework in the EU, as long as this is not to the detriment of investors and/or the market. There is a general acceptance from all sides: work on the CMU has fallen too far behind, and it is not delivering results.

Added(10) The concept of admission of securities to official listing on stock exchanges provided for in Directive 2001/34/EC is no longer frequently used given market developments, as Directive 2014/65/EU already provides for the concept of ‘admission of financial instruments to trading on a regulated market’. The two concepts ‘admission to official listing’ and ‘admission to trading on a regulated market’ are often used interchangeably in some Member States. That means that, in some Member States, no distinction is made between the two concepts. Furthermore, the dual regime of admission to trading, on the one hand, and admission to official listing, on the other hand, could lead to legal uncertainty at Union level, in particular, due to the fact that the requirements laid down in Directive 2003/71/EC, Directive 2004/109/EC and Directive 2014/57/EU of the European Parliament and of the Council do not apply to instruments admitted to official listing, while those requirements apply to instruments admitted to trading on a regulated market.

RemovedThe EU capital market continues to lose ground when compared to other continent-wide markets. In relative terms but not only, the share of market capitalisation worldwide has been shrinking these last three years, and this with Brexit taken into account.

Added(11) To enhance the visibility of listed companies, in particular SMEs and to adapt the listing conditions to improve requirements for issuers, the power to adopt acts in accordance with Article 290 of the Treaty on the Functioning of the European Union should be delegated to the Commission in respect of amending Directive 2014/65/EU. The market capitalisation threshold for companies, for which the re-bundling of trading execution and research fees would be possible, should be removed while introducing safeguards to ensure investor protection and maintain a level of transparency regarding the costs associated with research. The adaption of the listing rules in the Union should also reflect market practice for it to be effective and promote competition. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

RemovedThe Listing Act aims to reduce regulatory burdens, generally perceived as one of the main obstacles to progress towards a flourishing EU capital market. A reduction in regulatory burdens associated with listing must, however, not come at the expense of keeping strong investor protection rules in place.

Added(12) Directive 2014/65/EU should therefore be amended accordingly.

RemovedIn the spirit of attaining a balanced approach, the Rapporteur has met with a great number of market participants and regulators. On this basis, the Rapporteur is proposing to amend the Commission’s proposal on a number of elements while maintaining and enhancing its main raison d’etre.

Added(13) Since the objectives of this Directive, namely to ease Union small and medium capitalisation companies’ access to capital markets, and to increase the coherence of Union listing rules cannot be sufficiently achieved by the Member States but can rather, by reason of the improvements and effects sought, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Directive does not go beyond what is necessary in order to achieve those objectives.

RemovedThe major changes relate to the following issues: threshold for prospectus requirements; length of the prospectus; strengthening of ESG requirements; MAR’s revision on insiders; proposed changes to the Mifid II Directive; and the widening of the Multiple Voting Structure Directive.

AddedHAVE ADOPTED THIS DIRECTIVE:

RemovedThreshold for prospectus requirements

AddedDirective 2014/65/EU is amended as follows:

RemovedThe Rapporteur believes that due to the current European market architecture, a uniform EUR 12 million threshold for exempting small offers of securities to the public from the obligation to publish a prospectus is not in the best interest of maintaining satisfactory regulation over the market at national level. Therefore, it is proposed to adopt the Commission’s approach on the sequencing of the prospectus, to also allow an increase of the threshold to EUR 12 million but at the same time giving flexibility to Member States to adopt lower thresholds with a minimum of EUR 5 million threshold.

Added(1) in Article 4(1), point (12) is replaced by the following:

RemovedLength of the prospectus

Added‘(12) ‘SME growth market’ means a MTF, or a segment of a MTF, that is registered as an SME growth market in accordance with Article 33;’;

RemovedAs part of the Listing Act proposal, the Commission is attempting to create an EU-level standardisation for prospectuses. This approach is generally welcomed by the Rapporteur. He fully agrees with the view that a uniform structure based on sequencing is ideal for all players on the market since it makes prospectuses more readable and comprehensible for both retail and professional investors.

Added(2) Article 24 is amended as follows:

RemovedYet, the Commission also seeks to introduce a blanket length limit at 300 pages for prospectuses in order, it claims, to make it easier for retail investors to read such prospectuses. The Rapporteur recognises that prospectuses are lengthy and possibly unreadable for the average retail investor. Yet, data shows that retail investors do not read prospectuses, even in countries where prospectuses are lower than 300 pages. The prospectus in fact remains a professional document prepared for professional investors. It is seen as an instrument that covers issuers for legal liability, mostly read by professional investors or advisors operating out of investing funding agencies. They have, or should have, no problem with reading and understanding prospectuses, no matter their length. For these stated reasons, the Rapporteur adopts the Commission’s view on the sequencing of prospectuses while suggesting to remove page limits on prospectus documents.

Added(a) the following paragraphs ▌are inserted:

RemovedStrengthening of ESG requirements

Added‘3a. research used or distributed to clients or potential clients by▌ investment firms providing portfolio management or other investment or ancillary services that has been produced by those firms, or produced by third parties and provided to those firms, shall be fair, clear and not misleading. Research shall be clearly identifiable as such or in similar terms, provided that all conditions applicable to the research are met.

RemovedThe Rapporteur welcomes the inclusion of ESG rules in the proposed framework, and is of the view that the placement of ESG rules needs to be strengthened in the prospectus presentation and elsewhere. Changes to the prospectus regulation must, in the Rapporteur’s view, remain coherent with the ongoing general EU reform commitment across this essential policy area, about which there is wide-ranging agreement.

Added3b. Where the research is paid, fully or partially, by the issuer and disseminated to the public or to investment firms or to the clients of investment firms providing portfolio management or other investment or ancillary services, such research shall be labelled as “issuer-sponsored research” provided that it is produced in compliance with a Union code of conduct for issuer-sponsored research to be developed▌ by ESMA in accordance with the second subparagraph.

RemovedMAR’s revision on insiders

AddedESMA shall develop draft regulatory technical standards to establish a harmonised Union code of conduct for issuer-sponsored research. The code of conduct shall set out minimum standards of independency and objectivity to be complied with by the providers of such research, and specify procedures for the identification and prevention of conflicts of interest.

RemovedThe Listing Act’s proposals for changes to the MAR are generally welcomed although the Rapporteur recognises the controversial nature of the Commission’s proposed revision on insiders and how to identify and monitor them. Here, the Rapporteur notes ESMA’s warning regarding the simplifications being proposed, which could harm the capacity of national supervisors to easily enforce the rules against market abuse. Therefore, the Draft Report proposes the removal of the Commission’s text on insiders list.

AddedFor the purpose of developing those regulatory technical standards, ESMA shall take into account relevant codes of conduct which have been established at national level. ESMA shall submit those draft regulatory technical standards to the Commission by … [12 months from the date of entry into force of this amending Directive].

RemovedProposed changes to the Mifid II Directive

AddedPower is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the second subparagraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010 of the European Parliament and of the Council*.

RemovedOn a general note, the Rapporteur welcomes the elements introduced by the Commission to the Mifid II Directive and in this context recognises the efforts aimed at facilitating the listing of companies.

AddedThe Union-wide code of conduct for issuer-sponsored research shall be made publicly available on ESMA’s website.

RemovedWith the aim of improving on the Commission’s proposals, the Rapporteur introduces the idea of regulatory technical standards by ESMA to establish an EU harmonised code of conduct for issuer-sponsored research. Furthermore, in view of reducing the risks of fragmentation of liquidity, the Rapporteur, extends the issuer non-objection requirement concerning the admission to trading of an instrument already admitted on SME Growth Markets, to any trading venue.

Added3c. Member States shall ensure that any issuer may submit its issuer-sponsored research, as referred to in paragraph 3b of this Article, to the relevant collection body as defined in [Article 2(2)] of▌ Regulation (EU) …/… of the European Parliament and of the Council**.

RemovedWidening of Multiple Voting Structures while safeguarding investors

AddedWhen submitting such information to the collection body, the issuer shall ensure that it is accompanied by metadata specifying that the information complies with the Union code of conduct for issuer-sponsored research but that it is not to be considered regulated information within the meaning of Directive 2004/109/EU of the European Parliament and of the Council*** nor investment research within the meaning of Directive 2014/65/EU and is therefore not subject to the same level of regulatory scrutiny as such regulated information or investment research.

RemovedThe Commission’s proposal for this Directive is that companies should be able to choose governance structures that best suit their development stage. The Rapporteur agrees with the approach with some proposed adjustments.

Added3d. Research that is labelled as issuer-sponsored research shall indicate on its front page in a clear and prominent way that it has been prepared in accordance with the Union code of conduct referred to in paragraph 3b. ▌ Any other research material paid fully or in part by the issuer but not prepared in compliance with the Union code of conduct as referred to in paragraph 3b shall be labelled as marketing communication. Member States shall ensure that competent authorities have the necessary supervisory and investigative powers to enforce compliance by investment firms producing or using issuer-sponsored research with the Union code of conduct referred to in paragraph 3b.’;

RemovedSpecifically, in order to increase the attractiveness of listing in the EU, the option for multiple voting structures should not be limited to SME growth markets but expanded to all regulated markets. Furthermore, in order to maintain a high level of trust in the market, the Rapporteur introduces a set of obligatory safeguards including a limited voting ratio and a 10-year (definite time-set) sunset clause.

Added(b) ▌paragraph 9a▌ is amended as follows:

Added(i) the first subparagraph is replaced by the following;

Added‘9a. Member States shall ensure that the provision of research by third parties to investment firms providing portfolio management or other investment or ancillary services to clients is to be regarded as fulfilling the obligations under paragraph 1 if:

Added(a) an agreement has been entered into between the investment firm and the research provider, identifying the part of any combined charges or joint payments for execution services and research that is attributable to research;

Added(b) the investment firm informs its clients about the separate or joint payments, as applicable, for execution services and research made to third party providers of research, and of the consequences of the choice of separate or joint payments for the client; and

Added(c) the investment firm regularly assesses the quality and price of the research used based on robust quality and price criteria and its ability to contribute to better investment decisions. ESMA shall develop guidelines for investment firms for the purpose of conducting these assessments.

Added(ii) the following subparagraphs are added:

AddedMember States shall also ensure that the provision of research by third parties to investment firms providing portfolio management or other investment or ancillary services to clients is to be regarded as fulfilling the obligations under paragraph 1 if the research is provided by an independent research provider that is not engaged in execution services and is not part of a financial services group that includes an investment firm that offers execution or brokerage services.

AddedInvestment firms shall keep a record of separate payments and gather information distinguishing the part of combined charges or joint payments for execution services and research that is attributable to research provided to them. Investment firms shall inform their clients annually, in an aggregated form, of their annual expenditure on research that is attributable to clients.

AddedMember States shall ensure that third party providers of research are not required to facilitate joint payment for execution services and research from investment firms. Member States shall also ensure that investment firms purchasing research from third party providers of research shall always be able to pay separately for the execution services and research that they receive.

AddedBy … [3 years from the date of entry into force of this amending Directive], ESMA shall prepare a report with a comprehensive assessment of the market developments regarding research within the meaning of this Article. That assessment shall incorporate at least the research coverage of listed firms, the costs and quality of that research, the impact of joint payments on best execution by investment firms, the share of separate and joint payments made by investment firms to third party providers for execution services and research, and the level of fulfillment of the demand for research by investors and other buyers.

AddedBased on that report, the Commission may, if appropriate, submit to the European Parliament and the Council a legislative proposal concerning changes to the rules laid down in this Directive regarding research.

Added(c) the following paragraph is inserted:

Added9b. ESMA shall organise a procedure for the establishment of a voluntary Union-wide research marketplace focusing on research into small and medium-sized enterprises and initial public offerings (IPOs). The research marketplace shall be funded through fixed contributions by participating firms. Research shall be commissioned by independent research providers.

AddedESMA shall develop draft regulatory technical standards setting out the conditions for establishment of a voluntary Union-wide research marketplace on research into small and medium-sized enterprises, including at least the following elements:

Added(a) the conditions for joining the research marketplace;

Added(b) the governance principles;

Added(c) the funding arrangements;

Added(d) the research coverage of the research marketplace.

AddedESMA shall submit those draft regulatory technical standards to the Commission by … [12 months from the date of entry into force of this amending Directive].

AddedPower is delegated to the Commission to supplement this Directive by adopting the regulatory technical standards referred to in the second subparagraph of this paragraph in accordance with Articles 10 to 14 of Regulation (EU) No 1095/2010.

Added__________________

Added* Regulation (EU) No 1095/2010 of the European Parliament and of the Council of 24 November 2010 establishing a European Supervisory Authority (European Securities and Markets Authority), amending Decision No 716/2009/EC and repealing Commission Decision 2009/77/EC (OJ L 331, 15.12.2010, p. 84).

Added** Regulation (EU) …/… of the European Parliament and of the Council of… establishing a European single access point providing centralised access to publicly available information of relevance to financial services, capital markets and sustainability (OJ L... ELI:....).

Added*** Directive 2004/109/EC of the European Parliament and of the Council of 15 December 2004 on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC (OJ L 390, 31.12.2004, p. 38).’;

Added(2a) Article 27 is amended as follows:

Added(a) in paragraph 1, the first subparagraph is replaced by the following:

Added‘1. Member States shall require that investment firms take all sufficient steps to obtain, when executing orders, the best possible result for their clients taking into account price, costs, speed, likelihood of execution and settlement, size, nature, the provision of investment research, or any other consideration relevant to the execution of the order. Nevertheless, where there is a specific instruction from the client the investment firm shall execute the order in accordance with that specific instruction.’;

Added(ab) the following paragraph is inserted:

Added‘1a. ESMA shall develop guidelines on how investment firms providing portfolio management or other investment or ancillary services to clients can comply with their best execution obligations when the investment firm uses joint payments for execution services and research as permitted under Article 24(9a).’;

Added(3) Article 33 is amended as follows:

Added(a) paragraphs 1 and 2 are replaced by the following:

Added‘1. Member States shall provide that the operator of a MTF may apply to its home competent authority to have the MTF or a segment thereof, registered as an SME growth market.

Added2. Member States shall provide that the home competent authority may register the MTF, or a segment thereof, as an SME growth market if the competent authority receives an application as referred to in paragraph 1 and is satisfied that the requirements in paragraph 3 are complied with in relation to the MTF, or that the requirements in paragraph 3a are complied with in relation to a segment of the MTF.’;

Added(b) the following paragraph▌ is inserted:

Added‘3a. Member States shall ensure that the relevant segment of the MTF is subject to effective rules, systems and procedures which ensure that the conditions referred to in paragraph 3 and all of the following conditions have been complied with:

Added(a) the segment of the MTF registered as ‘SME growth market’ is clearly separated from the other market segments operated by the MTF operator, which is inter alia indicated by a different name, different rulebook, different marketing strategy, and different publicity, as well as a specific allocation of the market identification code to the SME growth market segment;

Added(b) the transactions made on the specific SME growth market segment are clearly distinguished from other market activity within the other segments of the MTF;

Added(c) upon request of the MTF’s home competent authority, the MTF shall provide a comprehensive list of the instruments listed on the SME growth market segment concerned, as well as any information on the operation of the SME growth market segment that the competent authority may request.’;

Added(c) paragraphs 4 to 8 are replaced by the following:

Added‘4. The criteria laid down in paragraphs 3 and 3a are without prejudice to compliance by the investment firm or market operator operating the MTF, or a segment thereof, with other obligations under this Directive relevant to the operation of MTFs. Those criteria do not prevent the investment firm or market operator operating the MTF from imposing additional requirements to those laid down in paragraphs 3 and 3a.

Added5. Member States shall provide that the home competent authority may deregister a MTF, or a segment thereof, as an SME growth market in any of the following cases:

Added(a) the investment firm or market operator operating the MTF, or a segment thereof, applies for its deregistration;

Added(b) the requirements in paragraph 3 or 3a are no longer complied with in relation to the MTF, or a segment thereof.

Added6. Members States shall require that if a home competent authority registers or deregisters a MTF, or a segment thereof, as an SME growth market under this Article, that authority shall as soon as possible notify ESMA of that registration or deregistration. ESMA shall publish on its website a list of SME growth markets and shall keep that list up to date.’;

Added▌

Added7. Member States shall require that a financial instrument of an issuer which is admitted to trading on an SME growth market is able to be traded on another trading venue only if the issuer has been duly informed and has not objected.

AddedESMA shall develop guidelines on the communication methods used and the relevant timelines.

Added8. The Commission is empowered to adopt delegated acts in accordance with Article 89 to supplement this Directive by further specifying the requirements laid down in paragraphs 3 and 3a of this Article. Those requirements shall take into account the need to maintain high levels of investor protection to promote investor confidence in those markets while minimising the administrative burdens for issuers on the market. They shall also take into account that de-registrations do not occur nor shall registrations be refused merely because of a temporary failure to comply with the requirement laid down in paragraph 3, point (a), of this Article.’;

Added(4) the following article ▌ is inserted:

Added‘Article 51a Specific conditions for the admission of shares to trading

Added1. Member States shall require that the foreseeable market capitalisation of the shares for which admission to trading is sought, or if this cannot be assessed, the company’s capital and reserves, including profit and loss, from the last financial year, shall be at least EUR 1 000 000 or an equivalent amount in a national currency other than the Euro.

Added2. Paragraph 1 shall however not apply to the admission to trading of shares fungible with shares already admitted to trading.

Added3. Where, as a result of an adjustment of the equivalent amount of the Euro in national currency, the market capitalisation expressed in national currency remains for a period of 1 year at least 10 % approximately the value of EUR 1 000 000, the Member State shall, within the 12 months following the expiry of that period, adjust its laws, regulations or administrative provisions to comply with paragraph 1.

Added4. Member States shall ensure that regulated markets require at least 10% of the subscribed capital represented by the class of shares concerned by the application for admission to trading to be held by the public at the time of admission.

Added5. Where the percentage of shares held by the public is below 10% of the subscribed capital, Member States shall ensure that regulated markets require that a sufficient number of shares is distributed to the public to fulfil the requirement laid down in paragraph 4.

Added6. Where admission to trading is sought for shares fungible with shares already admitted to trading, regulated markets shall assess, to fulfil the requirement laid down in paragraph 4, whether a sufficient number of shares has been distributed to the public in relation to all the shares issued and not only in relation to the shares fungible with shares already admitted to trading.

Added7. The Commission is empowered to adopt delegated acts in accordance with Article 89 to amend this Directive by modifying the thresholds referred to in paragraphs 1 and 3 or in paragraphs 4 and 5 or in both, when the applicable thresholds impede the liquidity on public markets taking into account the financial developments.’;

Added(4a) In Article 69(2), first subparagraph, the following point is added:

Added‘(v) supervise whether investment firms that produce or distribute issuer-sponsored research do so in compliance with the Union code of conduct developed by ESMA as referred to in Article 24.’;

Added(5) Article 89 is amended as follows:

Added(a) paragraphs 2 and 3 are replaced by the following:

Added‘2. The delegation of power referred to in Article 2(3), Article 2(4), Article 4(1)(2), second subparagraph, Article 4(2), Article 13(1), Article 16(12), Article 23(4), Article 24(13), Article 25(8), Article 27(9), Article 28(3), Article 30(5), Article 31(4), Article 32(4), Article 33(8), Article 51a(7), Article 52(4), Article 54(4), Article 58(6), Article 64(7), Article 65(7) and Article 79(8) shall be conferred on the Commission for an indeterminate period of time.

Added3. The delegation of power referred to in Article 2(3), Article 2(4), Article 4(1)(2), second subparagraph, Article 4(2), Article 13(1), Article 16(12), Article 23(4), Article 24(13), Article 25(8), Article 27(9), Article 28(3), Article 30(5), Article 31(4), Article 32(4), Article 33(8), Article 51a(7), Article 52(4) Article 54(4), Article 58(6), Article 64(7), Article 65(7) and Article 79(8) may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force.’;

Added(b) paragraph 5 is replaced by the following:

Added‘5. A delegated act adopted pursuant to Article 2(3), Article 2(4), Article 4(1)(2), second subparagraph, Article 4(2), Article 13(1), Article 16(12), Article 23(4), Article 24(13), Article 25(8), Article 27(9), Article 28(3), Article 30(5), Article 31(4), Article 32(4), Article 33(8), Article 51a(7), Article 52(4), Article 54(4), Article 58(6), Article 64(7), Article 65(7) or Article 79(8) shall enter into force only if no objection has been expressed either by the European Parliament or the Council within a period of three months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by three months at the initiative of the European Parliament or of the Council.’.

AddedDirective 2001/34/EC is repealed as of … [OP please insert the date = 24 months from date of entry into force of this Directive].

Added1. Member States shall adopt and publish, by … [OP please insert the date = 12 months from the date of entry into force of this Directive] at the latest, the laws, regulations and administrative provisions necessary to comply with this Directive. They shall forthwith communicate to the Commission the text of those provisions.

AddedThey shall apply those provisions from … [OP please insert the date = 18 months from the date of entry into force of this Directive].

AddedWhen Member States adopt those provisions, they shall contain a reference to this Directive or be accompanied by such a reference on the occasion of their official publication. Member States shall determine how such reference is to be made.

Added2. Member States shall communicate to the Commission the text of the main provisions of national law which they adopt in the field covered by this Directive.

AddedThis Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.

AddedThis Directive is addressed to the Member States.

AddedDone at Brussels,

AddedFor the European Parliament For the Council

AddedThe President The President