The European Council adopted targeted amendments to the markets in financial instruments directive (MiFID) II and the prospectus regulation to facilitate the recapitalisation of EU companies on financial markets in the wake of the COVID-19 crisis.
Together with adaptations to the EU’s securitisation framework, the measures form part of the Capital Markets Recovery Package agreed between the Council and the European Parliament at the end of last year. The aim of the package is to make it easier for capital markets to support economic recovery from the pandemic.
MiFID II amendments
The MiFID II rules have been amended to simplify information requirements in a targeted manner, while safeguarding investor protection. The changes reduce, for instance, the information on costs and charges that must be provided to professional investors and eligible counterparties. Paper-based investment information will also be phased out, except for retail clients if they ask to continue to receive it.
The new rules will also allow banks and financial firms to bundle research and execution costs when it comes to research on small and mid-cap issuers. This will help to increase research on such issuers and their access to funding.
Other changes include adaptations to the position limit regime for commodity derivatives to support the emergence and growth of euro-denominated commodity derivatives markets.
EU recovery prospectus
The prospectus regulation has been amended mainly to establish a new ‘EU recovery prospectus’. This shorter prospectus will make it easier for companies to raise capital to meet their funding needs, while ensuring adequate information is provided to investors.
The recovery prospectus will be available for capital increases of up to 150% of outstanding capital within a period of 12 months. The new regime will apply until the end of 2022.
(consilium.europa.eu / photo: pixabay)