Introduction to Listing a Security

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.