The Financial Conduct Authority (FCA) has set out proposals to make it easier for listed companies to issue corporate bonds that wealth managers and retail investors can buy.
The city watchdog is also proposing to simplify the requirements that apply to listed companies when they issue further shares. By doing so, the FCA is attempting to streamline the process by cutting “red tape”.
The FCA is consulting on a single standard for corporate-bond prospectuses, covering both large and small (less than £100,000) bond sizes.
This in turn would reduce costs and barriers for companies raising capital and give “investors the information they need to make an informed decision”.
The aim behind these moves is to encourage companies listed on stock exchanges to offer bonds in smaller sizes, improving investment opportunities for wealth managers and retail investors.
The FCA said: “More flexible and cheaper capital raising should help UK listed companies to grow.”
The new public-offer platforms will give an “alternative route” for companies to raise capital from retail investors and promote scale-up capital raising for smaller companies.
This will enable companies to make larger offers of shares or bonds to a broad investor base outside of public markets via an authorised firm.
This will build confidence in the new platforms and enable firms to access a wider pool of investors.
FCA interim executive director of markets Simon Walls said: “We’re opening the door for corporates to issue bonds in small sizes so that a wider range of investors can invest in them. That’s more funding for companies, more easily, and more choice for investors too.
“We want to make sure investors have the information they need to make informed decisions about risk while removing unnecessary costs and widening access.”
Additionally, the FCA recently set out proposals for a new private stock market, Private Intermittent Securities and Capital Exchange System (PISCES).
PISCES is one part of a set of measures designed to encourage businesses to grow and list in the UK and large investors to back them.
PISCES exchanges will be run by commercial providers and overseen by the FCA.
