Winterflood Securities is encouraged by the summary of responses in the FCA’s recently published ‘Engagement feedback on the new public offers and admissions to trading regime’. The paper includes almost universal support for the removal of the dual disclosure standard for wholesale and retail bonds, as well as outlining key steps towards the facilitation of broader access to listed bonds for retail investors.
We were really pleased to read that respondents to the FCA’s engagement papers “almost unanimously” supported the removal of the dual disclosure standard in the bond markets. Dual disclosure (read, easier wholesale disclosure) has been a key factor in the decline of retail’s access to regulated bonds since the implementation of the Prospectus Directive in 2005. The FCA’s proposed incentivisation scheme - which would encourage the issuance by seasoned UK-listed corporates of simple standardised unsubordinated unsecured corporate bonds aimed at a wide range of investors, retail, and wholesale - was also largely welcomed by the respondents.
In our recent white paper ‘Enabling broader access to the UK bond markets’, we showed that between 2000 and 2004, 67% of bonds were issued with retail-inclusive denominations of £2k or less – low denomination issuance was normal. But after 2005, this changed and between 2020 and 2023, just 3% of issuance had low denominations.
Our view is that a single standard of disclosure and an incentivisation scheme are material and positive changes for both issuers and investors. We and the retail investment community look forward to seeing the proposals in due course and their timely implementation.
To read the paper in full, follow this link.
If you would like to discuss the article or topic in more detail, please contact: Michael Smith, CFA, Debt Capital Markets at Winterflood Securities