New-style retail corporate bonds proposed

The Financial Conduct Authority has published proposals today which would pave the way for a new generation of smaller corporate bond issues aimed at retail investors and wealth managers. The crowd-funding style move would make it possible for a wider pool of retail investors to invest in larger and smaller corporate bonds, the FCA said. The changes would enable listed companies to issue corporate bonds - some under £100,000 - that wealth managers and retail investors can buy directly. The FCA says it will consult on a single standard for a new type of corporate bond prospectus, covering large and small (less than £100,000) bond sizes. The aim would be reduce costs and barriers for companies raising capital and, “give investors the information they need to make an informed decision.” Companies could make larger offers of shares or bonds to a broad investor base outside of public markets via an authorised firm, similar to crowdfunding platforms, the FCA says. If introduced, companies listed on stock exchanges could offer bonds in smaller sizes. This would provide new “investment opportunities” for wealth managers and retail investors, the FCA says. More flexible and cheaper capital raising should help UK listed companies find new investment and grow, according to the regulator which is under pressure from the government to promote growth and investment to boost the economy. The FCA also plans to simplify the requirements that apply to listed companies when they issue further shares. The FCA says it will cut the red tape surrounding new share issues. According to the FCA, the changes will provide an alternative route for companies to raise capital, including from retail investors, and promote scale-up capital raising for smaller companies. Having clear and consistent requirements for firms, and setting out what firms need to become authorised, will build confidence in the new platforms and enable firms to access a wider pool of investors, according to the FCA. Simon Walls, interim executive director of markets at the FCA, 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.” The FCA recently set out proposals for a new private stock market, PISCES, on which shares in private companies will be bought and sold. CP25/2: Consultation on further changes to the public offers and admissions to trading regime and the UK Listing Rules. CP25/3: Consultation on further proposals for firms operating public offer platforms.

New-style retail corporate bonds proposed

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