18 July 2023 Lucy Fergusson Capital Markets - Debt - Capital Markets - Equity

FCA engagement papers on public offer platforms and primary MTFs

The Financial Conduct Authority has published two further engagement papers asking for views on aspects of the new public offers and admission to trading regime. It published its first four engagement papers on the regime in May 2023.

The public offer platform

In Engagement Paper 5: The public offer platform, the FCA sets out its initial thinking about rules for the new regulated activity of operating a public offer platform. Securities offered via a public offer platform will be exempt from the general prohibition on offering securities to the public. It is envisaged that public offer platforms would primarily be used for companies seeking seed funding above the £5 million small offers exemption (see here).

The FCA is keen to ensure that public offer platforms will provide investors with sufficient information to assess the benefits and risks of investing in securities offered outside the public markets, and that platform operators undertake appropriate due diligence to prevent fraud.

The FCA is considering rules for platform operators to ensure that:

  • due diligence and company checks are conducted to prevent fraud, strengthen investor protection and support market integrity;
  • investors have adequate, accurate and useful information in relation to both the company and securities being offered, enabling them to understand the opportunity and risks when investing in securities on a platform; and
  • companies can raise capital efficiently and effectively through such platforms, subject to relevant scrutiny and transparency.

Primary multilateral trading facilities

In Engagement Paper 6: Primary multilateral trading facilities, the FCA sets out its initial thinking about future rules for multilateral trading facilities operating as primary markets (primary MTFs) under the new public offers and admissions to trading regime.

Discussion areas covered in the engagement paper include:

  • the circumstances in which primary MTFs should require the publication of an MTF admission prospectus;
  • who should be responsible for the prospectus;
  • the circumstances in which a supplementary prospectus would be required;
  • how and when withdrawal rights should be exercised; and
  • the requirements for advertisements regarding securities being admitted to trading on a primary MTF.

The FCA is also interested in understanding the likely costs and benefits of MTF admission prospectuses compared with current admission documents.

Next steps

The FCA welcomes written responses to the questions raised in the engagement papers by 29 September 2023.