Chapter 9 - The Securities Market Structure

Question 1

UK Listing Authority (UKLA)

Answer 1

Responsible for setting and administering listing requirements for Plcs seeking and obtaining a full listing on the LSE, including implementation of any relevant EU directives (currently).

The LSE is responsible for the operation of the exchange including trading of securities in secondary market, although UKLA can suspend the listing of particular securities, and can remove their secondary market trading activity.

Question 2

POTAM

Answer 2

Equivalent Treatment

Sufficient time to consider the bid

Board must act in the best interests of the shareholders

No false markets

Adequate resources for paying consideration

Reasonable timetable for the bid process

Question 3

Primary Market/ New Issues Market

Answer 3

Allow companies to raise capital via IPO.

Underwritten by Investment Bank (Guaranteed).

Best efforts basis (not-Guaranteed).

Large IPO usually underwritten by syndicate of IB’s led by a lead underwriter - who take the highest commission or gross spread.

Surplus funds held by potential investors be matched with investment opportunities

Question 4

Secondary Issue

Answer 4

Sale of securities by a shareholder of the company (as opposed to the company itself which is a primary offering)

Non-dilutive is a sale of securities.

Dilutive is follow-on offer or subsequent offer, the company is creating new shares and selling these to the public