Primary multilateral trading facilities – Engagement Paper 6

The Financial Conduct Authority (FCA) has published a so-called Engagement Paper in which the FCA seeks comments on prospectus and admission for trading requirements in relation to primary Multilateral Trading Facilities (MTF) under the new public offers and admission to trading regime (please see EventID 22209 in this context for more information on primary MTFs and the new (upcoming) regime).
The engagement paper is part of a series of documents the FCA is publishing in an effort to establish the „new“ UK prospectus regime which the regulator will be entitled to deliver (along an outlined framework) following the implementation of the Draft: Financial Services and Markets Act 2000 (Public Offers and Admissions to Trading) Regulations 2023 (POAT). Latter is expected shortly, following the enactment of the Financial Services and Markets Act 2023 (FSMA 2023) late June 2023. According to the draft regulations and the FSMA 2023, the FCA will be responsible for setting out admission rules, including rules on the format, content, and design of a prospectus, thereby eliminating the currently Retained EU Prospectus Regulation.
In this engagement paper now, the FCA seeks views on prospectus and other advertisement requirements that shall be implemented by primary MTFs with a view of promoting investor participation and providing quality information to investors that enable investors to make informed investment decisions. Specifically, the FCA seeks feedback on
(1) the circumstances in which Primary MTFs should require the publication of an MTF admission prospectus:
In this context, the FCA suggests mandating an MTF admission prospectus for all initial admissions to trading on primary MTFs that permit retail participation, regardless of whether there is a public offer or not. This would ensure that investors consistently receive the same type of admission document (MTF admission prospectus) whenever a company seeks to introduce securities to trading for the first time.
(2) who should be responsible for such a document:
In this context, the FCA suggests applying PRR 5.3 rule under its PRR Prospectus Regulation Rules sourcebook which requires the issuer to be responsible or any person that has explicitly taken on such responsibility. Responsible means that a person can be held liable for any mal-information or omissions and may have to pay redress in case of providing false or misleading information.
(3) the circumstances in which a supplementary prospectus should be required:
In this matter, the FCA proposes to maintain the current substantive requirements for publishing a supplementary prospectus, as outlined in Article 23 of the UK Prospectus Regulation. Specifically, for primary MTFs, the FCA suggests that a supplementary prospectus be required if there are significant new factors, material mistakes, or material inaccuracies related to the information in an MTF admission prospectus. This requirement to publish the supplementary prospectus would apply if any of these issues arise or are identified between the approval of the prospectus (according to the rules of the relevant primary MTF operator) and either the closing of the offer period or the start of trading on the primary MTF, whichever happens later.
(4) how and when withdrawal rights should be exercised:
In this context, the FCA again proposes to apply same provisions as stipulated in Article 23(2) of the UK Prospectus Regulation which permit the withdrawal from an issue subscription or withdrawal from a purchase only, if such agreement to buy or subscribe was made BEFORE a supplementary prospectus was published. The FCA further suggests to require issuers or responsible persons to make (retail) investors aware of such withdrawal rights.
(5) the requirements for advertisements related to securities being admitted to trading on a primary MTF:
In this context, the FCA proposes to extend the existing advertising rules in relation to securities listed or to be listed on organized trading venues to securities listed or to be listed on primary MTFs as outlined in the UK Prospectus Regulation and Retained Commission Delegated Regulation 2019/979.