IPO RESEARCH GUIDELINES: The UK watchdog affirmed the changes.
The FCA said new rules are necessary to ensure Britain remains ‘effective and efficient’.
Even though the wholesale financial market is robust in Britain. It will operate outside of the European Union from March 2019.
The UK watchdog had already set out draft proposals in March 2017. But, it published final rulings into research linked to initial public offerings (IPO).
The Financial Conduct Authority (FCA) provided a statement on the matter. They said a broad consensus wanted them to proceed with a package of measures. The most important was restoring the centrality of the prospectus in the IPO process.
The new regime should help analysts who are not from banks helping a company to list. Those analysts will get earlier access into the management team of a company. That should occur before analysts at banks who are ‘connected’ to the flotation publish their own research.
It follows a list complaints suggesting that the process is ‘not transparent enough‘. Investors expressed many difficulties in getting access to independent research. This is a vital part of researching companies planning to list on the stock market.
Early Company Prospectus Publication
The Financial Conduct Authority is the UK watchdog who regulate company prospectuses. They aim to make this document the chief source of investor information on a float. It will get published much earlier in the IPO process. Thus, it avoids a heavy reliance on the ‘connected‘ research.
The changes to the publication of independent analyst research are very significant. Changing the research rules for stock market listings should price shares more ‘fairly‘.
Changing the stock market listings research rules may not increase the ‘overall’ timetable for a listing. But, time will tell whether these changes lead to a huge increase in independent research volume or quality.
Either way, the London market will soon adapt to the new restrictions. New rules imposed by the changes take effect from July in 2018.
Review of Standard Listing for Companies
The FCA will also look into the ‘relative positioning’ of the existing standard listing for companies. This complies with EU minimum rules. The UK premium listing means companies also apply corporate governance codes.
True, the UK premium listing regime has broad support. But, the FCA received feedback that the standard listing is less well understood. In fact, many thought it to be much less attractive.
Market participants see an ‘important cohort’ of international issuers seeking a listing elsewhere. This also raises important questions about the ‘underlying rationale’ in the standard listing.
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