We want rules that balance and meet the needs of both issuers and investors. This is vital. High standards, properly monitored, and if necessary enforced, give investors the confidence to invest.
But, at the smaller end of the corporate spectrum, there are companies who do not have the scale to meet these requirements. It is unlikely their equity or debt issues would be large enough to support daily trading, and unclear they or their investors would need it. We would welcome a discussion on whether and how such companies could best access capital markets – for example, with periodic disclosures, perhaps with more periodic trading. Perhaps there is a link between such less liquid securities and the IA’s own work on the Long-Term Asset Fund.
For larger corporates, who already meet the UK’s super-equivalent premium listing standard, is there a case to simplify the process for follow-on equity issuance while maintaining valuable pre-emption rights and essential disclosures? Equally, away from the equity markets, for premium listed issuers, should we also allow debt issues in lower denominations and therefore make the debt of these corporates more accessible to retail investors?
The FCA cannot create markets. We cannot provide liquidity. But we can work – with others – to ensure we have a framework that accommodates markets in which others wish to participate.
As a result, in the coming weeks I would welcome your views on whether there are some types of companies who will find access to public markets limited as they seek to recapitalise post-crisis. And, if there are, why that is.
As I hope I have indicated in these few words, as part of this discussion we will be open to ideas about whether the current framework creates the right opportunities for both issuers and investors, as long as those suggestions are underpinned, as ever, by investor protection.
The questions I have posed are starters for 10. I hope to flesh these out over the coming weeks as we begin to engage market participants on these issues.
As I signalled in a speech last year, what we need is outcome-based regulation – deciding what it is we want markets to deliver for their participants and using all the regulatory tools Parliament has given us to achieve that. The Covid crisis and Brexit have only reinforced this need. We now have an opportunity to look again at our rulebook, focusing less on tick box compliance and more on promoting outcomes that serve the public interest.
And as we, the regulator, look for a regime focused on outcomes, I want to encourage the investment management sector to work with us to make sure we have a high-quality regulatory framework that supports a financial system fit for recovery.
