Britain sets out next leg of post-Brexit City shake-up

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By Huw Jones

LONDON (Reuters) -Britain set out on Friday the next leg of its post-Brexit shake up of the City in a bid to attract more investment to a cash-strapped economy by making it cheaper and easier for companies to tap shareholder funds.

Britain has already begun easing its financial rules under the “Edinburgh Reforms” to compete better with New York, and with European Union financial centres.

The new Labour government elected this month has pledged to build on the reforms.

The Financial Conduct Authority on Friday proposed setting up a new Public Offers and Admissions to Trading Regime (POATRs) to replace the existing system of companies publishing a prospectus when they want to sell more shares on the stock exchange.

Under the proposals, companies will still be required to publish a prospectus when first admitting securities to public markets. However, a prospectus would not be required when a company raises further capital except in limited circumstances.

“Putting the right information in the hands of investors and removing unnecessary costs will help further bolster the market,” Sarah Pritchard, the FCA’s executive director for markets, said in a statement.

It complements an easing of rules for companies planning an initial listing on the London Stock Exchange that come into effect on Monday.

“The FCA’s reforms build on the positive momentum created by its shake-up of the UK’s listing regime,” said Julie Shacklady, director of primary markets at UK Finance, a banking industry body.

INVESTMENT RESEARCH

The FCA also opened a consultation on proposals for a new activity of operating a public offer platform or POP.

“These platforms will offer an alternative route for companies to raise capital outside public markets including from retail investors,” it said.

“The introduction of the platforms should promote scale-up capital raising for smaller companies while ensuring that investors get the right disclosures on the key terms and risks of an investment.”

The proposals also draw lessons from the collapse of London Capital & Finance, leaving investors nursing losses from the unregulated “mini bonds” they had bought from the company.

The watchdog also confirmed new rules it proposed in April, that give asset managers more flexibility in how they pay for research on stock picks.

There is now an option for fees for investment research from banks and brokers to be “bundled” or combined with the cost of executing trades.

An EU rule had insisted on separate itemisation to make it easier to assess value for money from research, though the bloc has also eased this requirement in a bid to promote more research on smaller companies.

“Introducing greater freedom for firms in how they pay for investment research will also help to support a thriving market in the UK and further strengthen our international competitiveness,” UK Finance’s Shacklady said.

(Reporting by Huw Jones; Editing by Alex Richardson and Toby Chopra)