Capital Markets Update: June 2023

May’s news

FCA announces proposals to simplify listing rules in the UK

On 3 May 2023, the Financial Conduct Authority (FCA) announced its proposals to reform and streamline the listing rules in the UK. The aim of the proposals is to attract a wider range of companies to list, to encourage competition and improve choice for investors.

FCA publishes final rules to improve equity secondary markets

On 3 May 2023, the FCA published Policy Statement 23/4: Improving equity secondary markets which summarises feedback the FCA has received on proposals to improve trade execution and the information content of post-trade transparency for investors. The policy statement also sets out the direction of the FCA’s work on improving the resiliency of UK trading venues to outages and on the execution of retail orders.

CGI publishes report on greenwashing

On 3 May 2023, the Chartered Governance Institute UK & Ireland (CGI) published a report looking at greenwashing in the context of governance and considers the different forms of greenwashing alongside why they are problematic. The report also considers the legal and regulatory framework and the risks of greenwashing for organisations.

FCA launches new webpage

On 5 May 2023, the FCA launched a webpage highlighting the new framework that will replace the UK prospectus regime for public offers and admissions to trading. The webpage explains the FCA’s role in establishing the regulatory framework for public offers and outlines its plans to engage with the market to inform its work. The regime will be implemented under the Designated Activities Regime created by the Financial Services and Markets Bill when it becomes law.

IOSCO publishes report to help its members enhance SPAC regulations

On 10 May 2023, the International Organization of Securities Commissions (IOSCO) published its final report on special purpose acquisition companies (SPACs), which aims to help IOSCO members review or improve their regulatory approach to SPACs. IOSCO states the recent surge in SPACs raises concerns about investor protection and market integrity and the report identifies a set of common approaches and sets out some considerations for designing or fine-tuning SPAC regulatory frameworks.

Amendments proposed to Rule 21 of the Takeover Code

On 15 May 2023, the Code Committee of the Takeover Panel issued Panel Statement 2023/7 seeking views on proposed amendments to Rule 21 which restricts a target board from taking certain actions without shareholder approval on the basis that those actions might result in an offer or possible offer being frustrated. Responses are requested by 21 July 2023.

FCA publishes global markets speech

On 16 May 2023, the FCA published a speech by Sarah Pritchard, FCA Executive Director of Markets and Executive Director of International, on meeting the challenge in changing global markets.

FCA publishes engagement papers relating to new regulatory regime for public offers

On 18 May 2023, the FCA published a series of engagement papers relating to the new regime for public offers and admissions to trading on UK public markets. The deadline for responding to the questions raised by the engagement papers is 29 September 2023.

Takeover Code amendments on competitive bid situations come into force

On 22 May 2023, changes to the Takeover Code relating to the offer timetable in competitive bid situations took effect. The amendments relate to: (i) the application of the offer timetable in competitive bid situations where one or more bidders are using a scheme of arrangement; and (ii) miscellaneous changes to several Code provisions, including greater flexibility for the Takeover Panel in granting derogations and waivers from Code requirements in exceptional circumstances. The amendments apply to on-going transactions which straddle that date.

FRC publishes minimum standard for audit committees

On 22 May 2023, the Financial Reporting Council (FRC) published a minimum standard for audit committees in relation to the external audit.

IOSCO consults on crypto and digital asset markets

On 23 May 2023, IOSCO published a consultation report on policy recommendations for crypto and digital asset markets. In the consultation, IOSCO sets out 18 recommendations that have been developed by IOSCO’s Fintech Taskforce. They cover the key risks arising from the range of activities performed by cryptoasset service providers, including offering, admission to trading, ongoing trading, settlement, market surveillance and custody, in addition to marketing and distribution (covering advised and non-advised sales) to retail investors.

Non-financial reporting information review

On 24 May 2023, the Department for Business and Trade published a call for evidence for the non-financial reporting information review. The call for evidence seeks views on the costs and benefits of producing non-financial information, the value of information produced, and how the non-financial reporting regime might be improved in the future, and what investors and other stakeholders see as the priorities for the UK’s future non-financial reporting framework. The deadline for responses is 16 August 2023.

FRC proposes amendments to the UK Corporate Governance Code

On 24 May 2023, the FRC published for consultation proposed revisions to the UK Corporate Governance Code. Proposed amendments include that all significant director appointments should be listed in the annual report, describing how each director has sufficient time to undertake their role effectively considering other commitments. There are also proposals to strengthen the code in relation to diversity and inclusion. Responses to the consultation are requested by 13 September 2023 and the revised code will apply to accounting years commencing on or after 1 January 2025.

Insider dealing

On 26 May 2023, the Insider Dealing (Securities and Regulated Markets) Order 2023 was published. No substantive changes have been made to the draft order published on 17 April 2023. The order, which aligns the civil and criminal insider trading regimes, comes into effect on 15 June 2023.

Looking ahead to June 2023

7 June – Markets in Financial Instruments (Investor Reporting) (Amendment) Regulations 2022, SI 2022/1297 come into force.

15 June – Insider Dealing (Securities and Regulated Markets) Order 2023 which amends the Criminal Justice Act 1993 comes into effect.

28 June – closing date for responses to the FCA’s consultation on single listing category for equity shares in commercial companies.

30 June – closing date for responses to HM Treasury’s consultation on potential regulation of ESG ratings providers.

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