C 184/108
EN
Official Journal of the European Union
25.5.2023
4.8.
Equity research is a key element for developing a healthy ecosystem for SMEs' equity finance.
To complement existing research channels, authorising the bundling of SMEs' research with other services is likely to increase the production and distribution of research reports.
The EESC welcomes the proposed increase in the unbundling threshold to EUR 10 billion.
This will correct the decreased SME coverage and visibility that MiFID II (12) has created.
However, the EESC stresses that there is a higher concentration of equity research production in the hands of larger financial institutions.
Due to their scale, very large brokers are more able to set negligible fees and/or use trade execution to cross-subsidise the provision of research than small or medium-sized brokers (13).
Furthermore, large brokers are mostly interested in providing research on ‘blue chip’ companies, while SMEs may be underserved.
A large majority of issuers report (14) that MiFID II has decreased SME coverage and visibility.
The EESC sees a clear need to introduce further measures to encourage independent research, learning from best practices available in Europe (15). 4.9.
In the post-IPO phase, listed companies should be exemplary in terms of transparency, and the protection of minority shareholder interests should be the top priority.
If shareholders risk being treated unfairly or not protected well when the company goes public, their trust in EU capital markets will not increase.
The EESC highly values the Commission's approach in mitigating legal uncertainty surrounding disclosure requirements, via the targeted amendments to the Market Abuse Regulation. 4.10.
The Committee believes that the existing framework of ad hoc requests in cases of suspected market abuse seems appropriate and sufficient in order to achieve effective surveillance, while taking note that several supervisors see merit in enhancing the exchange of order book data through the CMOBS mechanism.
The scope in the proposal of CMOBS might pose the risk of creating an uneven playing-field, since bilateral trading venues would not be included in the mechanism. 4.11.
The EESC strongly encourages that other ongoing initiatives contributing to improving the attractiveness of public markets be pushed forward at an increasing speed.
The Committee has published several opinions on past, ongoing and expected legislative initiatives (16).
Fast progress towards the CMU should be maintained despite the geopolitical challenges; a strong CMU is needed more than ever precisely because of the growing risks of economic and social instability.
Brussels, 23 March 2023.
The President of the European Economic and Social Committee Christa SCHWENG
(12) (13) (14) (15) (16)
MiFID = Markets in Financial Instruments Directive Oxera report on Unbundling: what's the impact on equity research?, 2019.
European Commission, final report on The impact of MiFID II rules on SME and fixed income investment research, 2020.
See not-for-profit initiative ‘Lighthouse’ under the Instituto Español de Analistas Financieros.
OJ C 155, 30.4.2021, p. 20; OJ C 290, 29.7.2022, p. 58; OJ C 177, 18.5.2016, p. 9; OJ C 10, 11.1.2021, p. 30; OJ C 341, 24.8.2021, p. 41.