Capital Markets Recovery Package: Council adopts first set of measures to help companies access funding

The Council today 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.

Next steps

The texts of the legislative acts adopted today will be signed on 16 February and are expected to be published in the Official Journal before the end of February.

Amendments to MiFID II will enter into force on the day following their publication and member states will be required to transpose them into national law within nine months of that date. The measures will become applicable 12 months after the entry into force of the directive.

Amendments to the prospectus regulation will enter into force on the 20th day following the date of their publication.

Amendments to the EU securitisation framework are due to be voted on by the European Parliament at its plenary session in March. They will be adopted by the Council thereafter.