Module 5 Flashcards
Advantages of Joining and exchange?
Raising finance Enhanced status Higher profile Employee benefits Exit route
Disadvantages of joining an exchange
Cost
Public scrutiny
Dilution
Ongoing responsibilities
Trading of top stocks in form by
A fully electric order book known as stock exchange electric trading service
LSE regulates trading on the secondary markets for both
Main market
AIM
LSE regulated by what three bodies?
FPC Financial policy committee
PRA prudential regulation authority
FCA financial conduct authority
Criteria for admission to the main market premium listing
Min market cap 700000
Min shares in public 25%
Audited financial information 3 years
Appoint sponsor Yea
Criteria for admissions to standard listing of main market
Min market cap 700000
Min shares in public 25%
Audited financial info N/A
Appoint sponsor no
Advisers
Sponsor
Broker
Lawyers
Accountants
Admission to Aim
Legally established
Publish annual and interim accounts
Issuer must appoint and retain a nominated adviser
What are primary market transactions?
Raise finance by selling either equity securities or debt securities
Finance raised in a primary market by either selling shares through an exchange or by raising private equity
What are sales in the secondary market?
When first buyer wishes to sell the security
Provides cash for the security holder not the organisation that originally issued: secondary market
If a company wishes to trade on the LSE it must be?
Approved by the UK listing authority UKLA to be added to list of UK securities and then the LSE to be allowed to trade
The role of exchange is two fold:
Providing trading and information services, and regulation
Trading of top stocks is done by?
A fully electronic order book trading mechanism, the Stock exchange Electronic Trading Service SETS
The electronic order book automatically matches orders for the?
FTSE-100
FTSE-250
FTSE Small Cap
Index constituents and other liquid stocks
Displays willingness to buy or sell quantities of shares at specific prices or to execute against orders
Executions occur automatically in accordance with strict price and time priority
What is order driven price?
When there is frequent buying and selling of a particular share
Based on real world transactions
What is quote driven?
Trading of less liquid UK equities largely quote driven and supported by market markets; through SETSqx (quotes and crosses) or SEAQ Stock Exchange Automated Quotation systems
Role of market makers?
Providing buying and selling prices in the securities in which they are registered
Have to be member firms of the exchange
How do market makers make income?
From the difference between the buying and selling prices they offer
LSE regulated by three bodies established under what?
Financial services act 1 April 2013
Companies issuing securities on the main market are generally
Large companies with strong trading records
The main market is for
All sectors and all counties
31/01/18 1260 companies with £4.5 trillion combined market cap
Who are requirements for entry into main market set out by and in?
In ‘The Listing Rules’ issued by the UKLA, a division of the FCA
What is the two stage process for companies that wish to list in London?
Application to list from the UKLA
Admission to trade from the LSE
Once admitted by UKLA, an official list notice will be issued and once an admission to trading notice is also issued by LSE ready to buy and sell securities
Criteria for admission to main market?
Premium 700000 market cap 25% public hands 3 years audited Sponsor
Standard
700000 market cap
25% in public hands
What is a prospectus?
Directors that wish to list securities must prepare a detailed document called a prospectus to give to potential investors
Content of prospectus?
Content prescribed by UKLA
three years of audited accounts for premium
Details of working capital and indebtedness, major contacts and shareholders for both premium and standard
