New rules proposed for sponsors to enhance listing regime

Proposed new rules to ensure sponsors – typically investment banks and corporate finance specialists who assist issuers by advising them on their listing obligations – have the right skills, knowledge and expertise were published today by the Financial Conduct Authority (FCA) for consultation.  

The FCA requires premium listed companies (issuers) to appoint sponsors on major transactions. Sponsors provide expert guidance and carry out independent checks to ensure issuers comply with key parts of the FCA’s listing rules.

David Lawton, the FCA’s director of markets said:
"The sponsor regime is crucial to ensuring an appropriate level of consumer protection and market integrity in the premium listings.  Our proposals should clarify our expectations of sponsors and the standards that we will hold them to; ensuring that issuers and investors can have confidence in the sponsor regime."

The proposals include:

  • Requiring sponsors to have relevant experience within the last three years,
  • Setting out minimum requirements on skills, knowledge and expertise for staff,
  • Accepting applications from sponsors who wish to specialise in a particular sector, helping to encourage new entrants and greater competition.

The FCA is also seeking views on the use of ‘joint sponsors’ – where issuers appoint multiple sponsors to advice on a transaction; and technical changes to existing rules on circulars.

The consultation closes on 30 April 2014 and forms part of a suite of changes to the listing rules to enhance overall market integrity. The FCA expects to finalise the rules on sponsors in Q4 2014.

Notes for editors

  1. The consultation paper.
  2. More information on sponsors – including a list of sponsors.
  3. The listing rules set out the requirements for companies listed in the UK and are the responsibility of the United Kingdom Listing Authority (UKLA), operating under the FCA. They set out objective requirements for admission to the Official List and the continuing obligations for equity investors.  
  4. The rules ensure that investors are able to participate directly in the governance of the companies that they own, and receive timely and clear information that enables them to make active and properly informed decisions.
  5. On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  6. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  7. Find out more information about the FCA.