Voltaire once wrote: “We cannot wish for that we know not.”
This came to mind last week as we completed our submission to the European Commission on the Markets in Financial Instruments Directive (MiFID) consultation. The commission has been asking for views on a vast range of market structure and operation issues. It amounts to 148 questions.
Two questions asked whether there was demand for “specialised SME markets” across Europe and, if so, how should the commission go about creating them and what criteria should be used to distinguish the markets. There was little accompanying detail to the proposal, so it is very much wait-and-see.
Regardless, we have enthusiastically supported the concept of a specialised SME market and at the same time cautioned the commission to form an expert working group to explore various approaches rather than rush through a hasty, ineffective offering.
While tinkering with market structures may provide small and mid-caps with a more hospitable environment in which to raise money, a market is nothing without its investors to provide the liquidity. At the same time as the MiFID review, we have recently submitted our Budget representations to the chancellor, George Osborne, focusing on providing incentives to help drive private sector recovery and growth.
Our proposals include capital gains tax reform for Entrepreneurs’ Relief, extending venture capital schemes (including the Enterprise Investment Scheme (EIS) and Venture Capital Trusts (VCTs)) and eliminating stamp duty on shares of companies quoted on exchange regulated markets and allowing those companies’ shares to be placed in ISAs too. Ever mindful that we all wish for tax breaks for our areas of interest and given the public sector cuts we have tried, harder than ever, to put forward proposals which are accompanied by suggestions on how to pay for them.
So although we cannot wish for that we know not, we can know what we wish for. In both our MiFID response and our Budget representations, we see the small and mid-cap quoted sector as being the catalyst for growth and job creation. Creating specialised markets across Europe and directing tax incentives towards this key community would be progress of a new order.
Tim Ward is chief executive of the Quoted Companies Alliance. His past roles have included head of issuer services and head of marketing at the London Stock Exchange and finance director at FTSE, the index company.
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