Introduction to Listing a Security

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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Summary

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

Kate Craven

Kate is a senior member of ICMA and consults on various projects including the recent update of the Primary Market Handbook. Kate previously served as Director at Barclays Plc in the Legal Department. She was responsible for the team specialising in debt capital markets. Prior to joining Barclays, she served as Director at Merrill Lynch. Kate had started in the Transaction Management Group at Merrill Lynch International in 1993 before spending two years in Tokyo with Merrill Lynch Japan Securities. She later headed the team responsible for the documentation of syndicated Eurobonds and EMTN programmes. Kate became chair of the Legal & Documentation Committee of the ICMA in 2001 and was listed as one of the 8 top in-house lawyers in the 2001 edition of Chambers and Partners Index to Leading Lawyers.

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