The UK implementation of the EU Prospectus Directive - LIST! and changes to the UKLA Transactions Department

United Kingdom

The FSA announced in its late September 2004 issue of LIST!, amongst other issues, key changes to the UKLA's Listing Transactions Department to take account of market feedback calling for greater specialism in order to allow for risks to be identified earlier on. The following teams have been established:

  • the Sponsor Supervision Team – to be responsible for establishing closer relationships with sponsors, significantly increasing the UKLA's supervision of sponsors and requiring sponsors to focus on their responsibility for transactions and for unusual and complex issues;
  • the Central Equity and Debt Team – to be responsible for the help desk, general transaction allocation and risk assessment as well as the central debt desk and all low-risk equity and debt transactions. The team is also looking into improving the Electronic Submission System;
  • the Specialist Equity and Debt Team – to be responsible for transactions governed by the specialist chapters of the UK Listing Rules and for issues surrounding new products and structures. The team will play an important role in the review of Chapters 21, 24 and 26 of the UK Listing Rules relating to investment trusts, securitised derivatives and venture capital trusts respectively;
  • the Complex Equity Team – to be responsible for all medium and high-risk equity transactions not covered by the Specialist Equity and Debt Team; and
  • the Complex Debt Team – to be responsible for all medium and high-risk debt transactions not falling within the ambit of the Specialist Equity and Debt Team. This team will be setting up a debt user forum, which will be known as the Debt Consultative Committee (the equivalent of the Market User Forum currently held for sponsors on the equities side).

Of particular interest to debt capital markets participants is the creation of a new market for specialist securities with the aim of maintaining London's prominence as an international centre for the listing of securities, particularly for foreign issuers. It will be run using a London Stock Exchange platform, although not one that will be a regulated market for the purposes of the EU's Investment Services Directive ("ISD") and subsequently for the purposes of the new EU Markets in Financial Instruments Directive ("MIFID", previously known as ISD2). This new platform will have the added benefit for issuers of allowing them to follow the wholesale debt disclosure requirements stipulated by the EU Prospectus Directive (2003/71/EC) (the "Directive"), regardless of the denomination of those securities. The FSA expects that this will grant more flexibility with regards to the expiry dates of debt programmes issued before the full implementation of the Directive in July 2005 (the Directive itself does not allow any flexibility to grandfather existing note programmes and so all note programmes admitted to trade on a regulated market would otherwise have to be renewed on 1 July 2005 regardless of when the programme was last renewed).

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