There was a beam of light from the FCA yesterday in publishing an engagement paper which includes discussions related to investors accessing bonds, under broader market reform within the Public Offers and Admission to Trading regime. 

The FCA engagement paper, which focuses solely on non-equity securities, offers a pathway within debt capital markets, to create a much needed change in narrative, supplying listed issuers with the opportunity to facilitate a wider pool of investor accessibility to bonds, as well as a considering dual standards of disclosure for both retail and wholesale, as opposed to the current separate one. 

The FCA outlines that 'the proposed scheme seeks to benefit a range of participants, issuers and investors alike, giving issuers a new additional source of demand for their bonds and by giving investors better access to corporate credit’.

The paper, which recognises that any changes are not intended to create unwarranted obstacles or costs to debt capital markets, a key functioning part of the global financial system, also highlights that regulation and capital markets can work for everyone and should. 

 The regulation may well turn out to be the easy part in all this, changes to process will also be required by stakeholders in the debt capital markets ecosystem to achieve better access for all investors.

However, capital markets can and do adapt and we welcome the FCA offering a legitimate pathway of change. What is needed now is debt capital markets to function with everyone in mind - both wholesale and retail, where it is feasible.

Stacey Parsons is Head of Fixed Income Strategy at Winterflood Securities and Chair of the Working Group Investor Access to Regulated Bonds. 

The FCA are consulting on this area, and feedback is open until September 2023. Link below for more details: FCA launches Non-equity securities Engagement Paper, under the new public offers and admissions to trading regime.

In the media:

 FCA praised for opening direct bond access to retail investors Portfolio Adviser, Friday 19th May 2023