Capital Markets
Overview of Capital Markets Law in the EU
Capital markets law in the European Union (EU) is a comprehensive legal framework designed to regulate the issuance, trading, and supervision of securities and other financial instruments. Its main objectives are to ensure efficient, transparent, and resilient markets, protect investors, and foster cross-border investment and economic growth.
TYPES OF
TRANSACTIONS COVERED
Acumum has extensive experience in a number of capital markets – EU and USA, including work covering:
- Initial Public Offerings (IPOs)
- Secondary Offerings and Rights Issues
- Bond and Note Issuances
- Convertible and Equity-Linked Instruments
- Securitizations and Structured Finance Products
BENEFITS OF EU CAPITAL MARKETS
FOR RAISING MONEY
Accessing capital markets offers companies:
- Diverse funding options beyond bank loans, including shares, bonds, and crowdfunding.
- Lower financing costs due to investor competition and market efficiencies.
- Easier access for SMEs through simplified rules and alternative financing sources.
- Cross-border fundraising with harmonized EU regulations and a larger investor pool.
- Faster, more efficient processes thanks to digital platforms and streamlined procedures.
- Support for growth and innovation by providing capital for expansion and R&D.
- Greater resilience through risk diversification and multiple funding channels.
- Enhanced visibility and credibility by increasing transparency and attracting institutional investors.
EUROPEAN LEGAL FRAMEWORK
KEY REGULATORY FRAMEWORKS
EU Capital Markets Law governs the issuance, trading, and regulation of financial instruments across the European Union. It ensures transparency, investor protection, and market integrity.
MIFID II
Investor protection, transparency and trading venue regulation
EMIR
Regulation of OTC derivatives and clearing obligations
MAR
Prevention of insider trading and market manipulation
UCITS & AIFMD
Regulation of retail and alternative investment funds
PROSPECTUS REGULATION
Disclosure requirements for securities offerings
MICAR
New framework for digital assets and tokens
STRATEGIC OBJECTIVES
INVESTOR CONFIDENCE
Market Integration
SUSTAINABLE FINANCE
Digital Transformation
WHO BENEFITS
INVESTORS
Greater transparency
STARTUPS & SMES
Alternative financing options
CAPITAL MARKETS UNION (CMU)
The CMU is the EU’s flagship initiative to create a single, integrated capital market across all 27 member states. It aims to broaden access to finance, diversify funding sources, improve economic resilience, and facilitate cross-border investments, particularly benefiting small and medium-sized enterprises (SMEs). The CMU was launched to address the fragmentation of European capital markets, which remain divided along national lines despite the EU’s single market.
Regulatory Framework
Over recent years, the EU has shifted from directives (which require national implementation) to directly applicable regulations and numerous implementing acts to ensure a level playing field. Key regulations and directives include:
The EU has enacted a series of cornerstone regulations and directives. These rules are part of the Single Rulebook for EU financial markets, aiming to ensure a level playing field and facilitate cross-border activities:
LEGAL INSTRUMENT | PURPOSE / SCOPE |
---|---|
MiFID II & MiFIR | Harmonized rules for investment services, trading venues, and transparency |
Prospectus Regulation | Disclosure requirements for public offerings and admission to trading |
Market Abuse Regulation (MAR) | Prevents insider dealing and market manipulation |
Securitisation Regulation | Framework for simple, transparent, and standardised securitisation |
Central Securities Depositories | Rules for settlement and safekeeping of securities |
Benchmarks Regulation | Oversight of financial benchmarks used in financial contracts |
Short Selling Regulation | Rules on short selling and credit default swaps |
European Crowdfunding Regulation | Harmonized rules for crowdfunding platforms |
Transparency Directive | Ensures ongoing disclosure by listed companies |
INVESTOR PROTECTION AND MARKET INTEGRITY
EU law imposes strict rules to protect investors, including requirements for transparent disclosures, prohibitions on insider trading and market manipulation, and compensation schemes for investors in case of firm failures. National and European supervisory authorities (such as ESMA) have powers to intervene in the distribution of risky financial products if investor protection or financial stability is threatened.
SUPERVISION AND ENFORCEMENT
The financial crisis accelerated the development of a European supervisory structure. The European Securities and Markets Authority (ESMA) plays a central role, with increasing calls to centralize supervision and harmonize enforcement across the EU to prevent regulatory arbitrage and ensure market integrity
RECENT AND UPCOMING INITIATIVES
The EU continues to update its legal framework, most recently with the “Listing Act” (provisionally agreed in 2024), which aims to make capital markets more attractive and accessible, especially for SMEs, by reducing administrative burdens and improving oversight.
How Acumum’s Capital
Market services can help you
DUE DILIGENCE
- Investigate and verify the financial, legal, and business background of companies issuing securities.
- Assess risks and ensure all material information is disclosed to investors.
DRAFTING AND
REVIEWING
DOCUMENTATION
- Prepare prospectuses, offering memoranda, and disclosure documents for public and private offerings of equity (shares) and debt (bonds) securities.
- Draft and negotiate transaction agreements between issuers, underwriters, and other parties.
REGULATORY
COMPLIANCE
- Advise clients on compliance with EU and national securities laws, such as MiFID II, Prospectus Regulation, and Market Abuse Regulation.
- Guide clients through the approval process for stock exchange listings and ensure ongoing compliance with disclosure and reporting requirements.
TRANSACTION
MANAGEMENT
- Coordinate and manage the entire transaction process, often leading deal teams from initial discussions through to closing.
- Liaise with regulators, stock exchanges, and other stakeholders to secure necessary approvals and resolve legal or regulatory issues.
ADVISORY WORK
- Counsel issuers (companies raising capital), underwriters (investment banks), and investors on legal structuring, market trends, and risk management.
- Advise on corporate governance, securities law developments, and the impact of new regulations.
CROSS-BORDER
TRANSACTIONS
- Handle deals involving multiple jurisdictions, requiring knowledge of international securities regulations and coordination with foreign counsel.
CONTENTIOUS AND POST-
TRANSACTION WORK
- Assist with amendments, restructurings, or disputes arising from completed transactions.
- Support litigation or arbitration if transactions become contentious.
Clients
Represented
- Public and private companies (issuers)
- Investment banks and underwriters
- Private equity firms and institutional investors
- Corporate trustees and agents
If you would like to know more about how Acumum can assist your company in raising capital, please contact us.