What is a regulated market?

by Ovais Mirza Director, DICC

What is a regulated market?

The regulated markets are the places or exchange securities (shares, bonds ...) worldwide . The proper functioning of transactions between buyers and sellers is ensured and enabled by market companies. These companies, like Nyse Euronext in France, allow the exploitation of the regulated market by investors (individuals and institutions) . They also set the admission and write-off rules for the various securities in collaboration with the regulatory authorities on the financial markets (AMF in France). To prioritize the regulated markets it operates (Eurolist), Euronext has compartmentalized them.

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A regulated market: the Eurolist

The Eurolist groups together 3 compartments (A, B and C) where the shares are classified according to their market capitalization:

Compartment A : It includes stocks with a market capitalization of more than € 1 billion (Euronext Large Caps). This compartment brings together all of the CAC 40 companies as well as numerous SBF120 companies with sufficient market capitalization. It also brings together foreign companies which are part of the regulated markets operated by Euronext (Belgium, France, Netherlands, Portugal, United Kingdom). Compartment A groups the largest stock market values.

Compartment B : It includes stocks with a market capitalization of between 150 million and 1 billion euros (Euronext mid caps). These are the mid-sized companies on the stock markets.

Compartment C: It includes stocks with a market capitalization of less than 150 million euros (Euronext small caps). These are the small businesses on the stock markets.

The conditions to be respected to integrate the compartments of the regulated market

Publication of the quarterly turnover
Publication of the half
yearly result - Publication of the annual accounts (income statement + balance sheet)
Audited and certified accounts for the last 3 years
Free float of at least 25% on the capital: C ' that is, 25% of the capital must be open to the public.
Payment terms on a regulated market

On a regulated market, the investor has two possibilities to settle his transaction:

Spot market: In the case of a purchase, the operator pays on delivery of the tickets. In the case of a sale, the operator must transfer his securities at the time when the transaction is made. Payment / delivery is done without delay.

SRD market: Payment and delivery of securities is deferred from the time the transaction is concluded. For the seller of securities, it is a short sale transaction and for the buyer, it is a credit purchase on securities. The SRD is more expensive than a cash transaction.

The antechambers of the regulated market

Alternext market: Alternext is the antechamber of the regulated market . This is where small and medium-sized enterprises are listed, which cannot meet all the conditions for entry to the regulated market. Here are the rules which differ from the regulated market:

Audited and certified accounts for the last 2 years (1 year less than in compartments A, B and C). This allows younger companies to be listed on the financial markets.

No need to have a float of at least 25% of the capital. You just need a minimum of 2.5 million euros of capital for the public.

In return, the listing on these securities is not continuous most of the time. Securities can simply be processed during the 3.30pm fixing. They must have a minimum of 2500 transactions per year for the listing to be continuous (and have the same conditions as on the regulated market with a fixing at 5.30 p.m.).

Free market: It is the antechamber of the Alternext market. It is an unregulated market. There is indeed no admission rule. Only the shareholders of the company can make the request for the company to be admitted to the Free Market. If the company is accepted by Euronext, it has no duty to publish its income statements. It is simply a means for shareholders of small (often recent) businesses to be able to make their shares of the company available to the public.