The FCA has recently unveiled a comprehensive strategy aimed at enhancing the structure and efficiency of the UK’s capital markets.
This strategic update includes several pivotal reforms and new proposals that are expected to significantly impact both public and private sectors within the financial marketplace.
Central to the FCA’s strategy is the introduction of the Public Offers and Admissions to Trading Regime (POATRs), which is set to replace the current UK Prospectus Regulation. The new regime maintains the requirement for companies to publish a prospectus upon first admission of securities to public markets.
However, it alleviates the necessity for a prospectus in subsequent capital raising activities, except under specific conditions. This adjustment is poised to reduce the financial burden on companies seeking additional capital, thereby facilitating easier access to funding and promoting more dynamic capital flows within the market.
Additionally, the FCA is proposing the creation of a new platform for public offers, designed to serve as an alternative funding avenue outside of traditional public markets. This initiative targets smaller companies in particular, aiming to streamline their scale-up processes by providing access to retail investors. The introduction of such platforms is expected to ensure that investors receive comprehensive disclosures about investment terms and associated risks.
In an effort to foster a more competitive and flexible market for investment research, the FCA has also confirmed new rules that permit the bundling of payments for research and trade execution services. This change is designed to enhance operational efficiency and align with international standards, thereby assisting UK asset managers in purchasing global research more effectively.
Furthermore, the FCA is launching a consultation on derivatives trading obligations, which seeks to refine the regulation of secondary markets. This move is anticipated to mitigate systemic risks and minimise market disruptions.
Sarah Pritchard, executive director of markets and international at the FCA, commented on the developments: “The package we have set out today, alongside our recent reforms to the listing rules, will help to strengthen the UK’s position in wholesale markets. We know we need to strike the right balance between protection for investors and allowing capital markets to thrive.
“With that in mind, we have engaged extensively and broadly in developing the final set of rules to support a thriving investment research market. We are also setting out key reforms to the prospectus regime, and welcome engagement from the sector so that we can get the balance right before deciding the final regime. Putting the right information in the hands of investors and removing unnecessary costs will help further bolster the market.”
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