Mark Hynes - thoughts on corporate disclosure

Opinions on changing rules, changing best practices, and their effect on investor relations officers.

Thursday, April 06, 2006

FSA Listing Rules conference – an overview

The FSA held its fourth Listing Rules conference this week, at which it both looked back at the implementation of the new disclosure and prospectus rules, and forward in launching two new consultation papers.

Launching the conference, John Tiner, the FSA’s Chief Executive, struck a pretty satisfied tone with the way in which regulation is evolving in the UK. The introduction of EU rules from the Market Abuse Directive and the Prospectus Directive (PD) have been reasonably well received, although by no means perfect.

He announced that the FSA would launch a new consultation in September, aimed at being a “sweeping up exercise” for those areas in need of attention. He confirmed that the aim of introduction of new rules in the UK would always avoid gold plating, “unless the market desired it or there was a sound cost benefit analysis”. And the FSA’s aim is to introduce rules that are “principles based rather than mechanistic”.

Several investment bankers examined the PD. Largely – in the presence of the FSA teams – they were complimentary about the effects. However, they pointed to several areas of problem. First, the patchy timing of the introduction across the EU meant that the benefit of a pan EU prospectus could not be realised. Also local regulations on translation, filing, publication of notices, as well as uncertainty on subsequent offers, presented problems.

Tiner and others also highlighted one area of major concern: lack of clarity on insider lists. With the disparity of the size of lists, the FSA is considering some new guidance. One Company Secretary admitted that their list had 750 names, and that others he had researched were similar. Meanwhile they also had 30 restricted persons (persons discharging managerial responsibilities) – whose share dealings must be handled. Both were excessive.

The conference was introduced to the Consultation Paper on the Transparency Directive. Largely the FSA has proposed a “copy out” of the EU rules, on the basis that the existing UK rules are already compliant. However, one area is important. The FSA is looking for feedback on the issue of CFDs and whether they should be included in the major shareholdings rules. On other major shareholding rules, the FSA is likely to retain the existing rules, according to Tiner.

The consultation can be downloaded as a pdf from the FSA website through the following link: