Introduction to Listing a Security
Kate Craven
35 years: Capital markets
In this video, Kate introduces the topic of listing. She highlights who sets the rules and the relevant regulations that the rules are contained in and also explains what the impact of Brexit will be on the UK listing procedure. Finally, she discusses why issuers would list securities.
In this video, Kate introduces the topic of listing. She highlights who sets the rules and the relevant regulations that the rules are contained in and also explains what the impact of Brexit will be on the UK listing procedure. Finally, she discusses why issuers would list securities.
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Introduction to Listing a Security
7 mins 22 secs
Key learning objectives:
Understand what a listing is
Identify who sets the rules for listing
Recognise why an issuer would list a security
Overview:
A listing means that an offering document (or prospectus) for an issue of debt or equity securities has been reviewed and approved by a stock exchange, and the securities are admitted to trading on that exchange. There are various rules for listings depending on the type of listing venue and where the security is listed. Benefits of listing securities outweigh the negatives, although listing is not possible for certain issuers, including a larger investor base, Quoted Eurobond Exemption and ECB eligibility to name a few.
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What is a listing?
Listing means that the offering document for an issue of debt or equity securities has been reviewed and approved by a stock exchange, and the securities are admitted to trading on that exchange.
A listing does not imply any kind of credit approval by the relevant stock exchange. It simply signifies that the disclosure in the offering document satisfies the rules of that stock exchange.
Who sets the rules for listings?
Securities offerings in the EEA are regulated by the EU Propspectus Regulation, which sets out requirements for securities which are intended to be admitted to trading on a regulated market.
The regulated market tends to be the main market for listing debt securities and, in the EEA, is subject to MiFID II, MAR, the Transparency Directive and the Prospectus Regulation.
Exchange-regulated markets do not need to follow EU Directives and Regulations and can therefore take a more flexible approach when reviewing a prospectus.
Why list a security?
- Larger investor pool:
Investors generally prefer to buy listed securities and often investment mandates restrict asset pools to only include listed securities. - Quoted Eurobond Exemption:
In order for debt issued by UK issuers to qualify for the Quoted Eurobond Exemption and be free from withholding tax, a requirement is that the debt must be listed on a recognised stock exchange. - ECB eligibility:
Some investors, such as banks, may have a strong preference to purchase bonds that meet the collateral eligibility criteria of the European Central Bank. These criteria (which may change at short notice) are intended to ensure that the collateral provided to the ECB is of good quality. As well as the securities having to be investment grade, issued in specific currencies – currently Euro, Yen, US Dollars and Sterling - and issued by issuers and guarantors based in the EEA and non-EEA G10 countries – they must also be listed in the EEA.
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Kate Craven
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