EBF position on the proposal for a Regulation to revise
the European Prospectus regime

Publication date: 15 February 2016

Key points:

• The EBF welcomes the Commission’s proposal to review the prospectus regime. The EBF is strongly supportive of the objectives of the proposal and we think it is indeed an important step to building a Capital Markets Union. The suggested amendments will contribute to the objective of making capital markets more accessible for investors. The Commission’s proposal highlights current shortcomings in the regime such as the costs, complexity, the length of prospectuses, and differences in application between Member States.
• The EBF is of the opinion that the proposed Prospectus regime will contribute to a more streamlined and coherent approach across the European Union, reducing fragmentation at national level and reducing the scope for differences in national legislation. However – in order to ensure a European coherent approach – a greater degree of harmonisation would be favourable. Further harmonisation throughout the European Union would be needed on the following key points: i) the need for harmonisation for offerings below EUR € 10 million; ii) less discretion needs to be granted to Member States for supervising marketing materials, warning signs and texts; and iii) streamlining the requirements regarding the approval process (including approval period).
• The EBF is concerned about the proposed abolition of the wholesale/retail regime regarding the uniform prospectus requirement for bond issuances, irrespective of denomination sizes. While the EBF supports development of retail investment opportunities, the retail disclosure regime should not be developed at the cost of wholesale markets. The proposed abolition of the wholesale/retail regime split will not contribute to the objective to make the bond markets more accessible to a wider investor audience. In addition, since issuers offering non-equity securities solely to qualified investors or requiring a minimum commitment of EUR 100 000 per investor will still benefit from a prospectus exemption, the proposed change may lead to an increase in the number of offerings directed only to qualified investors, which may translate into reduced liquidity in corporate bond markets in the EU. The EBF considers that, instead of a full abolition, a reduction in the threshold would provide a better balance between the cost impact on stakeholders, the protection of retail investors and the intended liquidity enhancement.