13 May 2019

AFME response to FCA CP 19/6: Changes to align the FCA Handbook with the EU Prospectus Regulation

AFME notes that the FCA’s proposals in the consultation paper  cover the scenario where there is an implementation period following the UK’s withdrawal from the EU as envisaged under the withdrawal agreement between the EU and the UK. It proposes a number of changes to ensure that the FCA’s Prospectus Rules sourcebook is consistent with the new Prospectus Regulation EU 2017/1129 (Prospectus Regulation). AFME also notes that in the event of no deal, the FCA intends to recast its proposals, based on the assumption that the Financial Services (Implementation of Legislation) Bill is enacted into UK law.

AFME members have two practical concerns:

• where a prospectus contains inside information (e.g. if it is for a rights issue or spin-off IPO), it will be important that the FCA does not publish the prospectus before the issuer has announced that inside information via an RNS and by publishing the prospectus itself, so that all investors are made aware of that inside information through the usual channels and at the same time. Were the FCA to publish the prospectus before announcement by the issuer, this could result in a disorderly market as many investors may not be aware of the inside information as a consequence of it having been published by the FCA rather than within an announcement by the issuer; and

• even where a prospectus does not contain inside information, it would be important for the issuer, underwriting banks and any sponsor under Chapter 8 of the FCA’s Listing Rules to understand the FCA’s proposed publication mechanism, including any logistics, for addressing the potential timing mismatch, so the issuer can align its arrangements with the FCA’s timing, including any associated RNS announcements (e.g. a ‘publication of a prospectus’ announcement for an IPO).

Full response

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