CP26/14: Changes to information flows for UK equity IPOs

Read CP26/14 (PDF)[1]

Why we consulted

We introduced rules in 2018 designed to encourage the production of unconnected pre-deal investment research during the UK equity IPO process.

Feedback suggests that these changes haven’t always achieved their intended effect. Instead, the equal information sharing rules, particularly the addition of a ‘7-day delay’ for connected research, have added unnecessary market risk and costs for issuers listing in the UK.

Our proposals included:

• Amending COBS 11A.1.4FR to remove the 7-day waiting period between the publication of an approved registration document/prospectus and connected research.
• Removing COBS 11A.1.4BR - COBS 11A.1.4ER which mandate that syndicate banks intending to publish connected IPO research share the same information with a range of unconnected analysts as they do with their own research analysts.

We also included discussion questions on the remaining aspects of the 2018 IPO information flows rules to help explore where there are further opportunities for reform of these rules.

Who this is for

This consultation will affect:

• Prospective issuers 
• Retail and institutional investors in shares admitted to a UK regulated market 
• Investment advisers, brokers and other intermediaries
• Independent research providers (IRPs)
• Law firms involved in the IPO process
• Investment banks and other companies involved in the IPO process 
• Sponsors

Next steps

This consultation has now closed. We will publish feedback on responses and issue a policy statement once we have reviewed your comments.

Background

In UK IPOs, pre-deal investment research is commonly provided by banks to their institutional investor clients. This may be published either by syndicate banks providing deal-related services to the issuer (connected research), or by non‑syndicate firms and independent providers that distribute research to their own institutional client base (unconnected research).

We first introduced the rules on unconnected analysts in July 2018. This followed concerns raised in discussion paper DP16/3 (PDF)[2] about the lack of availability of information during the UK equity IPO process and potential policy options for improving the quality of this information. Following industry engagement, the suggested changes were proposed in CP17/5 (PDF)[3] and then made into final rules in PS17/23[4].