The Financial Conduct Authority (FCA) has set out proposals to make it easier for listed companies to issue corporate bonds that wealth managers and retail investors can buy.
The regulator is consulting on a single standard for corporate bond prospectuses, covering both large and small (less than £100,000) bond sizes. This would reduce costs and barriers for companies raising capital and give investors the information they need to make an informed decision. The aim is to encourage companies listed on stock exchanges to offer bonds in smaller sizes, improving investment opportunities for wealth managers and retail investors. More flexible and cheaper capital raising should help UK listed companies to grow.
The FCA is also proposing to simplify the requirements that apply to listed companies when they issue further shares. Among other changes, the FCA is proposing to streamline the process by cutting red tape.
The new public offer platforms will offer an alternative route for companies to raise capital, including from retail investors, and promote scale-up capital raising for smaller companies. It will enable companies to make larger offers of shares or bonds to a broad investor base outside of public markets via an authorised firm, similar to crowdfunding platforms. Having clear and consistent requirements for firms, and setting out what firms need to become authorised, will build confidence in the new platforms and enable firms to access a wider pool of investors.
Simon Walls, interim executive director of markets at the FCA, said:
“We’re opening the door for corporates to issue bonds in small sizes so that a wider range of investors can invest in them. That’s more funding for companies, more easily, and more choice for investors too.
“We want to make sure investors have the information they need to make informed decisions about risk while removing unnecessary costs and widening access.”
The FCA recently set out proposals for a new private stock market, PISCES, on which shares in private companies will be bought and sold. This follows the FCA’s wide-ranging reforms to the UK’s world-leading markets to boost competitiveness, including:
- helping a wider range of companies to list on a UK exchange.
- making it cheaper and easier for companies to raise money in the UK.
- giving asset managers greater freedom in how they pay for investment research.
- opening the Digital Securities Sandbox so firms can test innovative new technologies.
- delivering a plan for regulating cryptoassets.
