This annual publication explores some of the core focus areas for UK-regulated financial services firms in the year ahead. 2023 saw significant progress on the regulatory reform agenda, and many measures consulted on or reviewed as part of the Edinburgh Reforms will be finalised and/or implemented in the course of 2024.

We also saw the passing of the Financial Services and Markets Act 2023, many provisions of which have already come into effect and have made important changes to the

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.

FCA takes an innovative approach to obtain feedback from industry and stakeholder groups.

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

In May 2023, the FCA launched a process of engagement and dialogue on how the UK’s future prospectus regime could operate. The FCA’s first thematic engagement papers, published on 18 May, aim to solicit discussion and feedback on: (i) whether or how to set prospectus requirements for issuers seeking admission to trading on UK regulated markets; (ii) whether or how to set prospectus requirements for issuers raising further capital; and (iii) how forward-looking information should be covered in prospectuses.

The timetable sets out three tranches of extensive regulatory changes to UK and EU law in 2023 and 2024.

By Rob Moulton, Becky Critchley, Denisa Odendaal, and Dianne Bell

The “Edinburgh Reforms”, a series of announcements made on 9 December 2022 by the Chancellor of the Exchequer (see here), set out the UK government’s reforms to drive growth and competitiveness in the financial services sector. The Reforms build upon the reform agenda that the government is taking forward through the Financial Services and Markets (FSM) Bill and which implements the Future Regulatory Framework Review.

The changes indicate a more dynamic and flexible UK prospectus regime with the FCA to play a central role through enhanced rule-making powers.

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

On 1 March 2022, the UK government (through HM Treasury (HMT)) announced the outcome of its consultation to reform the UK prospectus regime. The consultation was published in response to recommendations from Lord Hill’s UK Listing Review to enhance the competitiveness of the UK capital markets. Broadly, the announced changes indicate a more dynamic and flexible UK prospectus regime with the FCA to play a central role through enhanced rule-making powers.

The HMT’s announcement essentially indicates a direction of travel. The impact of these changes will not be fully understood until the publication of the legislative changes and the FCA’s consultation papers. HMT states that the government will legislate to replace the existing prospectus regime when parliamentary time allows.

New length restrictions will require issuers to focus on key information for investors.

By James Inness and Connor Cahalane

Under the Prospectus Regulation, which comes into force on 21 July 2019 (See EU Prospectus Regulation: New Format and Content Requirements), issuers preparing equity prospectuses will need to comply with new rules on the summary section. While the changes allow some flexibility on the information issuers must include in the summary, there are new requirements and restrictions that issuers need to be aware of. 

The full regulation will come into force in July, imposing new requirements for prospectuses

By James Inness and Connor Cahalane

The new EU Prospectus Regulation will take full effect on 21 July 2019. Issuers and other parties to capital markets transactions can expect changes in the following areas:

  • Prospectus summary: New content requirements and length restrictions will make the summary section more concise while allowing issuers the flexibility to include key information for investors.
  • Risk factors: With some material changes to the rules relating to risk factors and new ESMA guidelines, risk factors are likely to be a particular focus area for regulators.
  • Simplified prospectus: A new reduced disclosure regime will apply to secondary issues, such as rights issues.
  • Growth prospectus: Certain issuers, mainly SMEs, will be able to make public offers using an EU Growth Prospectus with lighter disclosure requirements and a standardised format.

Although the new rules will not take effect until July, competent authorities are already applying the new requirements to any prospectuses under review that are expected to be approved after 21 July 2019. In the coming weeks, Latham & Watkins will publish additional posts that take a more detailed look at the changes to the summary section, risk factors, and other areas that will impact transactions.

By James Inness

A new prospectus regulation (Regulation (EU) 2017/1129) (the Regulation) will come into direct effect on 20 July 2017, with a small number of provisions applying immediately and the remainder applying from 21 July 2019. The changes under the Regulation will likely be relevant to issuers both before and after Brexit.

Which Provisions Will Apply Immediately?

The previous exemption allowing issuers to issue up to 10% of the number of shares of the same class already admitted without the need to publish a prospectus will be increased to 20%. The exemption also now applies to all types of securities, not just to shares. Clearly, issuers will welcome this increased flexibility and the market will undoubtedly see larger undocumented deals. Given investor resistance to larger cash-box offerings (absent shareholder approval) we do not expect the changes to the prospectus regime to affect market practice in relation to cash-boxes.