EUROPE - The European Securities and Markets Authority (ESMA) has launched a consultation paper on debt securities with the view to increasing legal clarity and applying a "proportionate disclosure regime".

The consultation process comes as the Commission seeks to revise the Prospectus Directive, which came into force in 2005.

The Prospectus Directive is the EU framework for the preparation of prospectuses in public offers of securities and where securities are admitted to trading on a regulated market.

Following the amendments brought to the directive in 2010, the Commission requested ESMA's technical advice.

The authority's consultation paper aims to improve legal clarity of the amendments brought to the Prospectus Regulation and proposes application of the proportionate disclosure regime to convertible/exchangeable debt securities.

After ESMA performed a fact-finding exercise concerning the application of such requirements back in 2010, it found that when the issuer's shares to be delivered are not yet admitted to trading on a regulated market, differing approaches are taken among the various EU jurisdictions.

"ESMA is of the opinion that these differing practices could jeopardise the aim of reaching maximum harmonisation in the field of prospectus disclosure requirements and the proper functioning of the passport procedures regarding prospectuses," it said.

"Therefore, it was concluded that further clarifications should be included in the Prospectus Regulation so as to ensure a uniform application of disclosure requirements for convertible or exchangeable debt securities."

ESMA will consider all the responses to this consultation paper in the third quarter.

It expects to publish a final report and submission of the technical advice to the Commission in the fourth quarter.