35 years: Capital markets
In the last video on this two part video series Kate covered the contents of a Prospectus and why it might vary. In this video she will cover whether a Prospectus is always required, why investors might prefer a listing and the different types of listing. She will also take us through the responsibilities of issuers and underwriters with respect to the Prospectus and how the risks can be mitigated - as well as commenting upon the impact of Brexit.
In the last video on this two part video series Kate covered the contents of a Prospectus and why it might vary. In this video she will cover whether a Prospectus is always required, why investors might prefer a listing and the different types of listing. She will also take us through the responsibilities of issuers and underwriters with respect to the Prospectus and how the risks can be mitigated - as well as commenting upon the impact of Brexit.
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12 mins 47 secs
Preparing the Prospectus is a collaborative process, involving the issuer, the underwriters and the listing venue – as well as the issuer’s legal advisors and auditors. It is critical to be familiar with the disclosure standards for various markets and products.
Key learning objectives:
Identify an investor’s preferences regarding a prospectus
Learn why investors prefer a listing
Describe a Medium Term Note Programmes
Define Due diligence
Define a Subscription agreement
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There are some exemptions to the Prospectus Regulations requirement to prepare a prospectus, which include that:
Majority of the investors prefer their securities to have a listing. Investors are, on the whole, fairly neutral about where the bonds are listed. Equity offerings are usually listed on the company’s home stock exchange (e.g. Frankfurt or Tokyo) but may also be listed on additional international stock exchanges (such as New York) to make them attractive to investors in other jurisdictions. Bond offerings are rarely listed on multiple stock exchanges.
It is frequently because their "investment mandate" clearly indicates that they will invest in publicly traded stocks. The investment mandate may also impose other criteria, such as only investing in:
The process of reviewing the prospectus to ensure that it contains all material information, and that, importantly, it does not omit any information, is known as due diligence.
The forms of due diligence may involve:
The ICMA recommendation states that:
The Subscription agreement is the contract entered into by the issuer and the underwriters. It deals with the practicalities of the issuance of the bonds and how the underwriters will subscribe for the bonds, and sets out the respective roles and responsibilities of the parties.
In this important contractual document between the underwriters and the issuer, the issuer will give representations and warranties including confirmation of:
The UK is currently conducting a “Listing Review” led by Lord Hill, which could result in some changes to the UK regime and the EU is due to review the Prospectus Regulation by July 2022. So over time we could start to see some divergence between the two regimes.
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