8 - REGS Flashcards
LSE responsibilities
- providing prim ary secondary market
- supervising member firms
- regulating markets it operates
-recording all transactions - disseminating price sensitive info via RNS
secs traded on LSE
shares of domestic plcs (either full listing or UK plcs on AIM)
ETFs
international equities
UK corp bonds
UK gov bonds
local authority FI secs
international bonds (including eurobonds)
LSE primary services
equity markets and primary issuance - capital raising via 4 main markets
- main market
- ISM (International secs market)
-PSM (profesh secs market)
-AIM
trading services - active liquid sec market
information services - real time pricing, news and other info
MTF and derivs
= Millenium exchange processes trades from MTF venues
this platform expands ability to process deriv trades but bulk of custom derivs bis is conducted off exchange
regulatory structure of UK market
Bof E including FPC
FCA
PRA
HMT
Panel on takeovers and mergers
Exchange membership and rules
COmpanies act
details general reqs for companies
many versions over the years
2006 act = overhaul of prev versions
key areas
- comp name
- memorandum of association
- articles of association
- share cap and maintenance cap
- meetings
- comms with shareholders
- directors duties
- comp sec and comp record
- annual reports and accounts
FCA role
has to recognise exchange before it is allowed to operate in UK - making it a RIE
- asses whether xc has sufficient systems and controls to run market
through UKLA - FCA lays rules down that must be met by comp before listing
consumer protection - supervises and enforces rules on regulated firms
FCA via UKLA can suspend listing of secs on LSE tho LSE is responsible for operation of xc
FPC
FPC - financial policy committee
macro prudential regulator within BoE to monitor and respond to systemic risk
HMT
econ and public finance ministry - overall responsibility for fiscal pol
supervisory role for UK financial framework
headed by chancellor of exchequer
POTAM
panel on takeovers and mergers
reqs set out in code consisting of 6 general prins
designed to ensure shareholders treated fairly
structured framework within which takeovers are conducted
1 - holders of secs in offeree comp of same class must get equiv treatment
2- sufficent time and info to decide
3- board must act in best interests of comp
4- false markets must not be created in shares of either comp
5- offeror must announce bid only after insuring they can pay
6- offeree comp must not be hindered in ops longer than necessary by bid
PTM levy £1 for any transaction over 10k on london exchanges
trade associations and professional bodies
UK finance - association for UK banking and financial services
IA - investment association - trad ebody for asset management industry
AIC - association of investment comps - classifies investment trusts by sector
CISI - professional body for secs and investment industry
PIMFA - mission to create optimal operating environment so member firms and focus on delivering best service to clients and responsible stewardship
Investment association - IA
trade body for UK asset management industry
classification system for unit trusts, OEICs, and ETFs
- growth, capital protection, income, specialist
- sub classes include index trackers and ERS funds (esg)
revised definition os esg funds in 2019 to be more in line with GSIA - help investors understand better
PIMFA
Personal Investment Management & Financial Advice Association
- trade association for firms that provide IM or financial advice
6 objectives
- Represent diverse range of firms in the investment and financial advice industry
- Provide the industry with leadership
- Lead the debate on policy and regulatory recommendations
- Promote the industry as a catalyst to develope a culture of savings and investment in the UK
- Promote a greater understanding of the sector
- Facilitate dialogue across industry stakeholders, whilst developing best practice guidance
advantages and disadvantages of listing
ADV
- easier and less expensive acces to capital
- raises profile
- increased liquidity and marketability
- diversify investor base
- attracting better management and employees via liquid equity participation
- facilitating acquisitions
DISADV
- dilution of control
- legal, accounting and marketing costs
- increased regulatory scrutiny
- risk of becoming takeover target
- risk of funding tarket not being met
-required public dissemination of info
LSE listing reqs
- Minimum market capitalisation £30m
- Minimum market value of bonds (if issued) £200K
- > 10% freely available/free float
- No restrictions on sale
- 3 years audited accounts
- Directors – experience and expertise
- 12 months working capital
AIM listing reqs
less rigorous than LSE
- no min market cap, free float or trading record required
- NOMAD - nominated advisor - must be appointed to advise directors in complying with AIM rules and prospectus preparation
- nominated broker - market and facilitate trading + provide ongoing info
