The Investor Access to Regulated Bonds (IARB) Working Group has highlighted unanimous support of the removal of the dual disclosure standards in prospectuses for retail and wholesale non-equity securities (bonds) in the recently published Engagement feedback on the new public offers and admissions to trading regime, by the UK’s Financial Conduct Authority (FCA).
“This includes strong support for use of the wholesale disclosure standard as a starting point to facilitate broader access to listed bonds,” the group noted. “Any scheme to encourage issuance by seasoned UK-listed corporates of simple, standardised, unsubordinated, unsecured corporate bonds aimed at a wide range of investors, retail and wholesale, is welcomed.”
IARB Working Group is a collaborative initiative formed in July 2022 to advocate for regulatory changes that would make it easier for all investors to access regulated transferable listed bonds. The working group is chaired by Stacey Parsons, head of fixed income at PrimaryBid, deputy chair Nick Dilworth, head of compliance at Winterflood Securities, and sponsored by The London Stock Exchange.
Parsons commented, “This is welcome news to the members of IARB, who have highlighted the significant detrimental impact that exclusion of direct access to Bonds has and is having on the investment activity of investors and their intermediaries, at a time when wholesale participants are solely offered direct access to this asset class. IARB members have worked tirelessly, over the last two years, to raise the point that exclusion of ‘retail’ remains wholly unsustainable and not in the spirit of financial inclusion, wealth and education”.
Dilworth added, “Investor access to Bonds is now becoming a reality for capital markets, with the barriers of entry finally being eradicated. In 2022, the FCA provided clarification to the application of PRIIPs to corporate bonds, promoting greater access and reducing complexity. The direction of travel on the Prospectus regime changes, will further improve this access. IARB encourages a timely implementation to support financial services and most importantly facilitate broader access to all investors”
Parsons concluded, “I am delighted that we have been able to collaborate with so many stakeholder entities, getting us to the point we are today, this includes the Financial Conduct Authority, who have been open minded on this area, since we first engaged them in 2021. The work of IARB is by no means finished, but knowing that support for change is unanimous, shows the strength and integrity of UK financial services, to know when regulation causes unintended consequences, we seek to rectify it”
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