What is an SME growth market, and how does an MTF qualify?

For MiFID II, a small or medium-sized enterprise is a company whose average market capitalisation was below €200 million, based on end-year quotes for the previous three calendar years. A company listed for under three years uses a set base price instead: if listed for less than a year, its closing price on day one; if listed for one to two years, its final closing price of year one; if listed for two to three years, the average of its final closing prices for each of its first two years of trading.

An issuer with no equity traded on any trading venue, such as a company that has issued only bonds, is treated as an SME if the nominal value of its debt issuance in the previous calendar year, across all EU trading venues, did not exceed €50 million. This test has applied since 11 October 2019. The exam material still describes the earlier test, which looked at the issuer's accounts (fewer than 250 employees, a balance sheet of up to €43 million and turnover of up to €50 million, two of the three being enough); that test no longer exists.

The operator of an MTF may apply to its home authority, in Cyprus CySEC, to register it as an SME growth market. At least half of the issuers traded on it must be SMEs. The test is run at 31 December and uses the average of the twelve month-end ratios for the calendar year just ended. A market with no operating history can be registered straight away; its SME proportion is checked once three calendar years have passed.

CySEC must also be satisfied that the market applies objective and transparent criteria for admitting issuers, runs a model that keeps trading fair and orderly, and requires issuers seeking admission to publish an admission document, prepared under their responsibility, saying whether and by whom it was reviewed. The market sets the document's minimum content, has it reviewed for completeness, consistency and comprehensibility, and requires a statement on whether the issuer's working capital is sufficient. Issuers must put out their annual report no later than six months after the year-end, and their half-yearly report no later than four months after the half-year, although since October 2019 the market may exempt issuers with no equity instruments traded on it from the half-yearly report. It must also require an issuer admitting its shares for the first time to make a minimum amount of them available for trading, a free float set by the market. The market publishes prospectuses, admission documents, financial reports and issuers' regulatory disclosures on its website, or links to them, for at least five years.

On the SME share, an SME growth market is deregistered only when SMEs make up less than half of its issuers for three calendar years in a row, so a single weak year does not end the status. It can still be deregistered at any time if it stops meeting the other registration conditions, or if its operator asks. Being an SME growth market matters to issuers because several market abuse rules apply to them in a lighter form, for example on insider lists.

The EU's Listing Act, Directive (EU) 2024/2811, lets a segment of an MTF, not only a whole MTF, register for SME growth market status from 6 June 2026, provided the segment is clearly separated. It did not change the €200 million definition. Cyprus had not yet transposed this change when this note was reviewed.