Recital 1

(1)The Capital Markets Union initiative aims at reducing dependency on bank lending and diversifying market-based sources of financing for all smaller and medium-sized enterprises (SMEs) and in the issuance of bond and shares by SMEs on public markets. Companies established in the Union that seek to raise capital on trading venues are facing high one-off and ongoing disclosure and compliance costs which can deter them from seeking an admission to trading on Union trading venues in the first place. In addition, shares issued by SMEs on Union trading venues tend to suffer from lower levels of liquidity and higher volatility, which increases the cost of capital, making this source of funding too onerous.