SMFSC Introduces New Rules and Proposals to Strengthen Wholesale Markets

The San Marino Financial Standards Council (SMFSC), in its role as a self-regulatory organization, has released a comprehensive set of measures designed to enhance the functioning of capital markets. The proposals focus on public offers, admissions to trading, investment research payment practices, and derivatives trading obligations, aiming to reduce burdens on member firms while ensuring market transparency and investor protection.

1. Modernizing Public Offer and Admission Requirements
   Under the newly proposed framework, companies will still be required to publish a prospectus for initial admissions of securities to public trading. However, in a significant easing of requirements, subsequent capital raises will generally be exempt from producing a full prospectus, except under specific limited circumstances.

Coupled with ongoing disclosure obligations, these changes are intended to maintain investor access to essential information while substantially lowering costs for companies seeking additional financing.

Additionally, the SMFSC is consulting on the introduction of a new regulated activity—operation of a public offer platform. These platforms would offer companies an alternative avenue to raise capital outside traditional public markets, including from retail investors. The initiative is expected to particularly benefit smaller enterprises, provided that clear disclosures on terms and risks are made to investors.

1. New Rules on Investment Research Payments
   The SMFSC has finalized rules granting asset managers increased flexibility in how they pay for investment research. The updated framework permits bundling payments for research and trade execution services—a move intended to stimulate competition, align with international standards, and simplify cross-border research procurement.

Following extensive industry consultation, the final rules incorporate adjustments to enhance operational efficiency and adaptability across firms, while embedding safeguards to uphold consumer protection and prevent a recurrence of past market misconduct.

1. Consultation on Derivatives Trading Obligations
   As part of its broader reform package, the SMFSC has also opened a consultation on proposals related to derivatives trading obligations. These are aimed at reinforcing the regulation of secondary markets, mitigating systemic risks, and minimizing operational disruption for member firms.

Self-Regulation: Balancing Efficiency and Protection
As a self-regulatory body, the SMFSC emphasizes a balanced approach—reducing unnecessary costs and barriers for market participants while maintaining strong standards for transparency, investor safety, and market resilience. These proposals reflect the organization’s ongoing commitment to fostering a competitive and stable wholesale market environment through member-led oversight and collaboration.