There is no equivalent provision to Rule 8. Background The repeal follows the implementation of new Securities and Futures Commission SFC requirements relating to pre-listing research reports which came into effect on 31 October The new requirements aim to ensure analysts' independence and objectivity in relation to pre-IPO research reports. In particular, they seek to ensure that pre-IPO research reports may only be prepared by reference to information reasonably expected to be contained in the listing document and information in the public domain.
Related Content The Financial Conduct Authority has published a trio of papers which relate mainly to initial public offerings. Some of the proposed changes are very significant, although others are relatively minor.
Among other things, the FCA has proposed improvements to the information that is provided to market participants in the UK equity IPO process, and technical enhancements to the listing regime.
It discusses concerns raised around access Ipo research paper information and conduct risk in the current process for an institutional-only IPO. In this process, the syndicate banks publish research on the IPO applicant connected research at the time of the intention-to-float announcement around four weeks before admission, following which there is a blackout period of about 14 days before circulation of a pathfinder prospectus to potential investors, with publication of the final approved prospectus only taking place following pricing of the IPO, typically two to three days before admission.
The FCA's view is that market integrity and consumer protection are compromised because investor information and price discovery Ipo research paper based primarily on connected research, which is potentially biased or perceived as biased, rather than on an approved prospectus.
The FCA also considers that the current IPO process restricts competition among analysts because of the barriers that analysts outside of the syndicate banks unconnected analysts face in producing IPO research. The FCA proposes two key reforms.
The first proposal is to require issuers to publish an approved prospectus or registration document and provide unconnected analysts with access to management before publication of connected research.
The FCA's intention is that this will restore the primacy of the approved disclosure document, improve the range and quality of information available to investors, and support more balanced investor education and price discovery. Issuers and syndicate banks would be given a degree of flexibility on how and when unconnected analysts are given access to management.
For example, if unconnected analysts are given access to management at the same time as the connected analysts at the syndicate banks, connected research could be released from one day after a prospectus or registration document is published.
Alternatively, if issuers prefer to communicate with unconnected analysts after the connected analysts, they could do so provided that the connected research is not released until at least seven days after the approved prospectus or registration document is published, thereby allowing the unconnected analysts the chance to prepare research in this period.
The FCA envisages working with industry bodies to develop an industry-standard set of research guidelines to specify reasonable terms of access and assist in determining an appropriate range of unconnected analysts.
The second reform is to clarify that any interaction between a bank's analysts and issuers or their corporate finance advisers would be treated as the analysts participating in pitching for the IPO work from the issuer and therefore be inconsistent with maintaining the analyst's objectivity until the bank has accepted an IPO mandate and its position in the syndicate has been agreed.
The FCA notes that issuers with debt securities admitted to trading on either a regulated market or a multilateral trading facility MTF would fall within the scope of MAR, and that first-time issuers would otherwise fall within the scope of MAR when making a request for admission to trading on a regulated market or MTF.
The FCA is seeking views on whether: The original rationale for the standard listing is still valid, that is, to offer a listing regime which is open to both UK and non-UK companies and is attractive to non-UK companies that might find the more onerous obligations under the premium listing unattractive.
A new international segment aimed at large non-UK companies should be developed as the evidence suggests that few non-UK issuers seek a standard listing of equity shares when a premium listing is inappropriate; instead, they generally opt for a standard listing of global depositary receipts.
This would be a standard listing but with additional investor protections such as: Other features of the premium listing regime would apply on a comply or explain basis.
Open-ended investment companies OEICs should be moved from the premium listing segment to the standard listing securities category. Stakeholders who were consulted by the FCA felt that the additional premium listing obligations were not necessary as OEICs are subject to regulations outside of the Listing Rules, such as the framework for undertakings for collective investment in transferable securities and the FCA's Collective Investment Schemes sourcebook.
The UK's primary equity markets are effective in providing capital to science and technology companies in the scale-up phase; and how the primary market structure and regulation might better support patient capital, that is, investment based on long-term considerations.
There is a role for a UK primary debt MTF market similar to those in Luxembourg and Ireland, with measures to support greater retail participation in debt markets. The FCA proposes to: Rewrite Chapter 6 of the Listing Rules to simplify and clarify provisions, in particular the rules relating to the three-year track record period and the independence rule.
Provide a new concessionary route to premium listing for certain property companies that cannot meet the three-year revenue earning track record. This would recognise that a property valuation report might be more appropriate to judge the maturity of the property company for eligibility purposes.
There will also be additional guidance in a new technical note: Provide additional guidance on the existing concessionary routes for scientific research-based companies and mineral companies.
Change the profits test to allow premium-listed companies to: In both cases, the company would still have to obtain guidance from the sponsor but would not need the FCA's agreement. Require that the figures used for classifying assets and profits be adjusted for transactions that meet or exceed the Class 2 threshold and have completed during the last financial year, which reflects current guidance.
Delete the presumption that an issuer should have its shares suspended after it announces a reverse takeover until a prospectus is published as there is insufficient information in the market.
Instead, the FCA will assume that the market can operate smoothly on the basis of the information that listed companies already make publicly available as part of their compliance with existing obligations. Remove the obligation to contact the FCA as early as possible:very few investment banks have published pre-IPO research.
The SIFMA Paper recommends that the SEC examine this issue and release a report on what, if any, regulatory or liability burdens continue to exist that may effectively prohibit investment banks from publishing pre-IPO research.
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In , the technology was In , the technology was. IPO market has undergone a change with an introduction of free pricing regime and has further advanced with implementation of Book Building process in as per the recommendations of the Malegam Committee which was set up in In this paper, we study the pre-IPO performance of the market, listing-date (day-0, as we call it) performance of IPOs, and post-IPO performance of IPOs in the short-run and in the long- run stretching as much as five years.
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