1. Additional time is needed to create a full assessment of the main challenges and opportunities of the regime.
Bearing in mind the grandfathering regime provided under the Prospectus Regulation, which meant that the majority of issuers, in particular with debt programmes, only started to look into the new regime for the 2020 update season, we will only gain a full understanding of the main impacts and concerns about the new regime as we move into 2021. That being said, it is expected that a greater uniformity in the preparation, updating and approval processes by National Competent Authorities (NCAs) will be observed.
2. Risk factors are so far the most challenging aspect of the new regime.
The Prospectus Regulation brought, amongst other aspects, a limit to the number of risk factors in the prospectuses, as well as in the summary, along with the materiality assessment obligation by issuers. ESMA published comprehensive guidelines on the topic, which aimed to bring clarification and harmonisation in the way market participants construe the new provisions. However, in general terms, risk factors were still a challenge for issuers as NCAs have different approaches and interpretations. A full ‘level playing field’ has not been reached yet.
3. Reliance on stock exchanges to meet publication requirements.
Reliance of issuers on stock exchanges, such as LuxSE, has grown in light of new prospectus publication requirements with many issuers lacking the infrastructure when it comes, for instance, to guaranteeing hyperlink validity for 10+ years on their own.
4. Number of listings on MTFs is increasing.
Over the years, the legal and regulatory regime as well as market practices have pointed issuers in the direction of MTFs, which in turn prompted investors to be more accepting of securities on MTFs rather than on Regulated Markets.
5. Professional segments are showing-up (but slowly).
The new regime brought the possibility of creating professional segments from which only issuers targeting professional investors can benefit from. Some market infrastructures have already launched these segments, including LuxSE. However, professional segments
are still a niche market.