London, 22 February 2017 – The World Federation of Exchanges ("WFE"), which represents more than 200 market infrastructure providers including exchanges and CCPs, today published a report into exchanged-based financing of Small and Medium Enterprises (SMEs), aimed at identifying globally-consistent barriers and opportunities for enhancing SME access to equity finance. 

As significant employers and potential contributors to global economic development, the growth of SMEs is vital to the nourishment of any vibrant economy. Access to external finance - which may help an SME transition into becoming a bigger company - is, however, a major barrier to this successful growth.

The primary findings of the report can be summarised as follows:

Reasons for listing:

  • Obtaining access to finance is important, with more than 90% of respondents raising capital at the time of their listing, but other reasons for listing were also cited, such as positioning the firm for growth (90%) and diversifying the investor base (80%).

Access to information:

  • Responses suggest that companies may not know enough about aspects of listing, such as corporate governance requirements and ongoing listing costs, to make an informed decision about the relative costs and benefits. Financial education for SMEs is, therefore, a critical component for a successful listing environment.
  • Both retail and institutional investors would like to have greater information, for example more research and analysis (57%), about SMEs, to encourage them to invest more in listed SMEs.

Compliance with listing requirements:

  • The sample group confirmed that SMEs perceive, and find, the process of listing and ongoing compliance to be burdensome, costly and time consuming. Indeed, this may act as a disincentive to list.
  • Perhaps because of this, companies value the support and assistance of authorised market intermediaries in complying with listing requirements.


  • In addition to investors and market intermediaries, issuers also valued and recognised the importance of liquidity.
  • Both retail and institutional investors expressed concern about the (typically) low liquidity of SME stocks. Respondents (85% of institutional, 67% of retail) cited 'mechanisms to increase liquidity' as the most important lever to enhance the SME ecosystem.

Market intermediaries:

  • 71% of market intermediaries service the SME market because clients demand it; but not necessarily because it is profitable to do so (only 58%).

Based on the findings above, the WFE makes three key recommendations to securities market regulators and exchanges:

  1. The complexity, cost and scale of listing, and maintaining a listing, should be reduced, to incentivise the use of equity markets by SMEs.
  2. The quality, not the quantity, of information available about SMEs should be enhanced. This includes information that SMEs disclose for regulatory compliance as well as that from third-parties.
  3. Mechanisms should be introduced to enhance secondary market liquidity in SME stocks and on SME markets, such as: dedicated market makers; expanding and diversifying the investor base; and exploring alternative secondary market trading models such as a quote-driven market.

The report concludes with an assessment of the potential application of fintech innovations such as crowdfunding, big data or blockchain in either meeting the WFE's recommendations, or making the economics of the current SME ecosystem more sustainable.

Nandini Sukumar, CEO, WFE said: "Our report - the first piece of global research that collates viewpoints from the supply, demand and intermediary segments of the SME market - gives new insight into the current understanding of SME markets. The results around the listing burden, the need to focus on quality not quantity of disclosure, and liquidity, are particularly relevant at this time. The report aims to give regulators and exchanges a benchmark when it comes to creating and assessing SME initiatives. Exchanges are at the heart of the real economy, and work daily to enable markets-based financing."

Siobhan Cleary, Head of Research & Public Policy, WFE said: "A vibrant and growing economy requires not just SMEs as employers, but the ability for these companies to access the necessary finance that enables them to grow. We are confident that our recommendations will contribute positively to the understanding of what can be done to enhance SME access to capital markets financing."

The report was compiled by collecting quantitative and qualitative information from the main participants in the SME ecosystem: listed and unlisted companies, institutional and retail investors, and market intermediaries, such as brokers, financial advisors, underwriters etc. Respondents were from five developed and emerging market jurisdictions: Canada, China, Mexico, Nigeria and South Africa. The WFE was supported in its research by an Advisory Group that included representatives from WFE member exchanges and securities market regulators.

The WFE's SME Working Group has 21 member exchanges from across all WFE geographies. Its ongoing mandate is to identify critical success factors for SME markets.

Click here to view the report in full.

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About the World Federation of Exchanges (WFE):

Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 200 market infrastructure providers, including standalone CCPs that are not part of exchange groups. The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its statistics database stretches back more than 40 years, and provides information and insight into developments on global exchanges. To access the WFE's monthly statistics report, please register or log-in here:

WFE exchanges are home to nearly 45,000 listed companies. The WFE promotes the development of fair, efficient and transparent markets. It works with policy makers, regulators and standard-setters around the world to support the development of effective rules and standards for exchanges and market participants. For more information, please visit:

Tags: smes

For more information, please contact:

Charlotte Wilson
Streets Consulting
Email: [email protected]
Phone: +44 20 7959 2235
Twitter: @TheWFE