The Scale segment for small and medium-sized enterprises (SMEs) on the Frankfurt Stock Exchange has been registered as “SME Growth Market” since today. This is a new category of multilateral trading venues (MTFs) in Europe, specifically targeted at SMEs and meeting EU-wide standards. The aim is to facilitate access to capital for SMEs, to enhance the reputation of such markets and the attractiveness of capital market financing.

“By registering as an SME Growth Market, we are further developing Scale with a view to other European countries. The segment is becoming better known, also among international investors,” says Renata Bandov, Head of Pre-IPO & Capital Markets at Deutsche Börse. “This increases the visibility of the companies currently listed in Scale, while at the same time giving European companies easier access to capital in Frankfurt,” explains Bandov.

Dr Norbert Kuhn, Head of Corporate Finance at Deutsches Aktieninstitut (German Stock Institute), welcomes Deutsche Börse's move: “The registration of Scale as an SME Growth Market increases the attractiveness of going public to finance growth, innovation and employment in Germany. To achieve a lasting effect on the number and volume of IPOs, the efforts of the stock exchange operators must be accompanied by political measures to strengthen the equity culture. Other countries like Sweden show that a deep-rooted equity culture has a positive impact on the number of listed companies.”

Issuers in an SME Growth Market benefit from regulatory relief. Under certain conditions they are exempted from the obligation to draw up insider lists and can make use of various prospectus simplifications. This should reduce the administrative and cost burden for SMEs and provide further incentives for them to finance themselves more through SME Growth Markets in the future. The EU plans to continue to make things easier for issuers in the future.

“SME Growth Markets offer small and medium-sized enterprises in Europe an efficient framework for access to capital markets. The current simplifications are a step in the right direction”, says Kay Bommer, Managing Director of DIRK – Deutscher Investor Relations Verband e.V. (German Investor Relations Association). “Nevertheless, further efforts are needed to ensure that we see more IPOs in the medium term”.

Rainer Riess, Director General of the Federation of European Securities Exchanges: “The SME Growth Markets have succeeded in introducing Europe-wide standards and facilitations for these companies. This is good and right, because SMEs are essential for the European economy. It is now important to further develop these standards, but also to establish the SME Growth Markets in practice. We therefore welcome the fact that the Scale segment of Deutsche Börse is now registered as an SME growth market.”

When Deutsche Börse introduced the Scale segment in March 2017, it had already aligned it with the requirements for SME Growth Markets laid down in MiFID II to meet future requirements for the promotion of SMEs in the European Union. Current and future issuers therefore expect neither extended inclusion requirements nor increased follow-up obligations. 

With Scale, Deutsche Börse addresses both growth companies and traditional SMEs. Currently 57 stock and bond issuers are listed, financial service providers are represented as well as industrial or software companies. Scale creates additional transparency through research reports and regular issuer roadshows in Europe.