(Recasts with more detail)
By Huw Jones
LONDON, March 1 Giving investors independent
research on stock flotations earlier will help keep Britain's
global financial centre competitive in the face of Brexit
uncertainty, a senior UK regulator said on Wednesday.
The Financial Conduct Authority (FCA) is proposing a
complete "resequencing" of when investors get a prospectus and
research on a company listing.
Under existing rules, the prospectus, which gives in-depth
information about the company that plans to list, is only made
available late in the initial public offering process.
Analysts at banks who are not involved in the IPO also have
little access to the information they need to produce research
to rival that from banks "connected" to the float.
"This is of particular concern given the conflicts of
interest that arise during the production of connected research,
including analysts coming under pressure to produce favourable
research on an offering if their bank is to secure a place on
the book-running syndicate," the FCA said in a statement.
Under the proposed rules put out to public consultation on
Wednesday, the prospectus would be published before the
Providers of independent research would also have access to
the company's management before connected research is published.
The changes would make prospectuses an earlier and more
central source of information for investors.
Tom Vita, an equity capital markets partner at Norton Rose
Fulbright law firm, said unconnected analysts were effectively
prevented from issuing research when an IPO was being marketed,
but lengthening the flotation process too much would create new
Britain is Europe's biggest financial centre but its
decision to leave the European Union in 2019 has raised
questions about whether it can maintain access to the bloc's
investors in future.
Christopher Woolard, the FCA's executive director of
strategy and competition, said the watchdog's proposals would
help keep Britain's wholesale market clean, effective and
"In periods of uncertainty as we face together now, it is
only on this basis, by meeting these tests, that the UK can
continue to consider itself a global centre for the issuance of
securities," Woolard told a Bloomberg event.
"We believe strong markets are firmly in the interests of UK
consumers, and we will innovate and take action to ensure those
markets remain open for business."
Earlier this month the FCA published separate draft rules to
make the listing of foreign companies in Britain more flexible.
Wednesday's proposals are similar to a system used in France
and the United States.
Woolard dismissed calls for a "light touch" regulatory
approach to keep Britain competitive after Brexit, saying that
strong standards and respected regulation gives people
confidence in UK markets.
Company research faces further upheaval next year under new
EU rules that will force banks to charge fund managers an
explicit price for research on securities.
(Reporting by Huw Jones; Editing by Alexander Smith and Susan