“The best of all possible worlds”? The access of SMEs to trading venues: Freedom, conditioning and gold-plating

According to Gottfried Wilhelm von Leibniz (Leipzig, 1646 - Hannover, 1716), we live in the best of all possible worlds. The giant of French philosophes, Voltaire, had a different view: in his novel Candide (1758), the disillusioned protagonist ends up with a different, anti-idealistic view. The landscape of EU capital markets legislation looks, at times, closer to the world of Voltaire, than to that of Leibniz. This is particularly the case of the rules that apply to SMEs wishing to access trading venues: a topic of paramount importance in the context of the burgeoning debate on the need to foster and accelerate the development of EU Capital markets. Pragmatism, case-by-case approach, absence of a truly systematic view seem to be the rule. Companies, and especially SMEs, that access trading venues in the EU are confronted with a complex, jagged and articulated regulatory horizon. This paper confronts the rules applicable across different MTFs in a number of jurisdictions, setting out their basic features, and the level of constraints, or freedom, that they imply for companies wishing to access them. The latest evidence provided by ESMA indicates more than 74% of issuers with shares traded on European trading venues are SMEs: a striking figure, such as to stimulate, per se, a new critical, wide debate on the current structure of capital markets regulation in Europe, well beyond the rules applicable in the context of trading venues. Capital markets legislation in the EU developed focusing on large, listed companies, whereby SMEs were seen as an exception, but, today, the reference framework has changed. The time, therefore, might be ripe for a radical re-thinking of the structure of such legislation, and the findings of this paper seem to point in that direction.