The Financial Conduct Authority (FCA) has launched a consultation over plans to reform the initial public offering (IPO) process in the UK.
The watchdog has voiced concerns that investors don't get enough information before new firms list on the stock market, posing risks. So it has drafted up proposals for investors to get independent research about the firm planning to float, sooner.
The paper proposes a package of policy measures aimed at improving the range and quality of information available to investors during the IPO process.
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Under current rules, the prospectus - which provides detailed information on the firm planning to list, is only made available late on in the process. And analysts at banks not involved in the IPO don't have much in the way of access to the information they need to produce research to rival that from banks connected to the float.
The FCA said it wants to establish an IPO process with "enhanced standards of conduct" during the production and distribution of connected research, where a prospectus document plays a more central role and where the necessary conditions exist for "the emergence of unconnected IPO research".
One proposal involves giving independent analysts access to an issuer's management before any research is published by analysts from the banks involved in the listing, as they may be under pressure to deliver more favourable reports.
The consultation will close on the 1 June, before a policy statement is delivered in the fourth quarter of this year.
Christopher Woolard, executive director of strategy and competition at the FCA, said:
The proposals we have outlined in today's competition paper are designed to improve the range, and timeliness of higher quality information that is available to investors during the process.
"IPOs are the lifeblood of the capital markets and giving access to a wider range of investors, both institutional and retail, is crucial to the long-term health of the UK's economy and its underlying companies," said Gonçalo de Vasconcelos, chief executive and co-founder of online equity investing platform SyndicateRoom.
"The move by the FCA signals a commitment to improve capital raises for great British businesses, giving them a greater chance on their funding journey."