A couple of interesting developments relating to the governing structure of the UK and European equity capital markets arose in the last month. We have summarised what you need to know in this article.
FCA publishes Primary Market Bulletin No.6
On 30 July 2013, the Financial Conduct Authority (FCA) published Primary Market Bulletin (PMB) No.6, the first edition in its capacity as the new regulatory authority governing the UK Listing Regime.
The edition explains the changes made to the Knowledge Base, the online bank of up-to-date guidance on the Listing Rules, Disclosure and Transparency Rules and Prospectus Rules, following feedback received on the proposed technical and procedural notes during the PMB No.2 consultation (July 2012) and the PMB No.5 consultation (February 2013). Click here for more information on the revised notes and the two new technical notes under consultation.
FCA consults on guidance on its approach to advancing its objectives
The FCA is required by law to publish guidance on how it intends to advance its operational objectives, which are:
to secure an appropriate degree of protection for consumers
to protect and enhance the integrity of the UK financial system
to promote effective competition in the interests of consumers in the markets.
On 24 July 2013, the FCA published a preliminary version of guidance on how it intends to achieve those objectives. On the publication of the guidance, Martin Wheatley, Chief Executive of the FCA, highlighted in particular, the objective to promote effective competition. In his view, the competition mandate is the "single most significant change" in the FCA's objectives as a regulator, as it is increased competition which leads to lower prices, better quality and choice for consumers and this ultimately leads to growth in the economy. Consequently, where the FCA identifies markets in which competition is ineffective, it has stated that it will take the necessary action, which could include the introduction of industry self-regulation, new rules or action against regulated firms. Furthermore, when pursuing its objective to protect and enhance the integrity of the UK financial system, as a matter of policy, the FCA will normally choose the available measure which is most conducive to the promotion of competition, provided that it is compatible with its duties as a whole.
The FCA also briefly summarises its supervisory role over sponsor firms, which includes ensuring that the rules and guidance for sponsors are fit for purpose; operating an approval and supervisory process for sponsors; and looking at how to reduce the risk of sponsor failure in a cost effective way using its available resources.
A copy of the draft guidance, "The FCA's approach to advancing its objectives", can be viewed here. The FCA has invited comments on its draft guidance. Responses are required by 27 September 2013, with a response and final guidance intended to be issued by early 2014.
ESMA consults on guidelines regarding the enforcement of financial reporting requirements
On 19 July 2013, the European Securities Markets Authority (ESMA) published a consultation paper on updated guidelines on the enforcement of financial information reporting requirements by competent authorities and other European bodies in relation to issuers whose securities are admitted to trading (or who have applied for admission to trading) on regulated markets. ESMA believes that, in order to achieve a proper enforcement regime to underpin investors' confidence in financial markets and to avoid regulatory arbitrage by issuers in the EU Single Market, there is a need for a common European approach to the requirements of the Transparency Directive on the enforcement of financial information reporting requirements. The consultation follows a review of the previous Committee of European Securities Regulators (CESR) standards on enforcement issued in April 2004. ESMA is proposing to transform the CESR standards' principles into ESMA guidelines so that enforcers must comply with them or explain their non-compliance. The guidelines establish the principles to be followed in the enforcement process, by defining, amongst other things, the scope of the enforcement, the expected characteristics of the enforcer and the types of enforcement actions that may be available to enforcers. Click here to see a copy of the consultation paper. The closing date for responses to the consultation is 15 October 2013. ESMA expects to publish the final guidelines in early 2014.