The FCA reveals its initial thinking on the regulatory framework for primary multilateral trading facilities and public offer platforms.

By Chris Horton, James Inness, Anna Ngo, and Johannes Poon

On 13 July 2023, the FCA published its fifth and sixth engagement papers to solicit discussion and feedback on the regulation of public offer platforms and primary multilateral trading facilities (MTFs) under the new regime for public offers and admissions to trading.

  • Public Offer Platforms — The near final version of The Public Offers and Admissions to Trading Regulations 2023 (POATRs) sets a new consideration threshold, £5 million. Above that threshold, issuers not admitted to trading on a regulated market or MTF would be required to make their UK public offers through a public offer platform, unless the offer falls under the other exemptions. The POATRs would also create a new regulated activity of operating a public offer platform, to be regulated by the FCA. The proposals are designed to facilitate crowd funding of private companies without the need for a full prospectus.

    The FCA is soliciting views through its fifth engagement paper on the regulatory framework for such public offer platforms, focusing on investor protection measures such as the due diligence to be performed by platforms when onboarding companies and the level of disclosures to investors.
  • Primary MTFs — The POATRs would grant the FCA the power to ensure that primary market MTFs that allow retail participation (such as AIM and the AQSE Growth Market) require issuers to produce an MTF admission prospectus in specified circumstances. Pursuant to the POATRs, MTF admission prospectuses would be subject to the same “necessary information test”, statutory liability, and compensation scheme as for prospectuses.

    Key points from the FCA’s sixth engagement paper:
    • The FCA proposes to require the publication of an MTF admission prospectus for all initial admissions to primary MTFs (including, potentially, reverse takeovers) even when there is no public offer.
    • The FCA considers it appropriate to give primary MTF operators the discretion to decide whether an MTF admission prospectus is required for a further issue of securities.The primary MTF operators would set the specific content requirements for MTF admission prospectuses and the process for reviewing and approving such documents.
    • The FCA is seeking views on other aspects around the regulation of primary MTFs, including the circumstances in which a supplementary prospectus should be required, the exercise of withdrawal rights, the persons responsible for an MTF admission prospectus, and extending the advertising regime to admissions to primary MTFs.

Next Steps

Stakeholders should send feedback on the engagement papers by email to the FCA by 29 September 2023. Following the engagement process, the FCA intends to provide feedback on key points raised and would publish consultation papers in 2024 to develop the specific rule proposals.

For a recap of the key reforms to the UK primary markets regime, please consult the Latham & Watkins UK Primary Market Reforms Tracker.