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FSA/PN/045/2007
04 April 2007

The Financial Services Authority (FSA) has today published an update on the investment entities listing review. In response to the feedback received to CP06/21 - Investment Entities Listing Review the FSA will consult on the introduction of a single listing regime for all UK and overseas closed-ended investment funds.

Hector Sants, FSA Wholesale Managing Director, said:

"Throughout our consultation on this aspect of the listing rules, we have been conscious of our responsibility to protect investors while having regard to the competitiveness of the UK market. We are persuaded by the responses that have indicated a preference for a single regime. This will form the basis of our proposals when we consult in June.

"The consultation has also sparked an important debate about the nature of the wider listed market and the segments of the listing regime that carry differing levels of regulatory requirements particularly with regard to overseas companies. We will explore those issues in a separate paper later this year."

In CP06/21 the FSA consulted on the appropriate listing regime for investment entities both based overseas and in the UK. Currently overseas companies are able to list under the 'directive minimum' requirements set out in Chapter 14 of the Listing Rules. Domestic funds are required to list under the more onerous Chapter 15.

There were a large number of responses to the consultation with general agreement on the objective of making the UK regime more attractive to less traditional funds. No one single solution to achieving this gained uniform support but the favoured route was through a single regime for all UK and overseas closed-ended investment funds based on modifying Chapter 15. This regime would be designed to achieve the appropriate levels of investor protection combined with the ability to be attractive to less traditional funds such as private equity and hedge funds.

A consultation paper setting out details of the proposed single platform will be published in June with a view to implementation taking place in Q1 2008.

Over the next few months the FSA will also hold discussions with stakeholders about the structure and quality of UK listed markets with the aim of publishing either a discussion or consultation paper on the topic later in the year.

Notes for editors

1. See update on the proposed policy.
2. The FSA, as well as seeking appropriate investor protection, has a statutory duty under the Financial Services and Markets Act 2000 when it makes rules in its capacity as the UK Listing Authority to have regard to the international character of capital markets and the desirability of maintaining the competitive position of the UK.
3. 'Directive minimum' refers to the standards established in the EU's Consolidated Admissions and Reporting Directive. Amongst other things, Investment companies listed under Chapter 14 of the Listing Rules are not required to comply with the diversification limits on investment portfolios, board independence rules or the limits on cross-holdings set out in Chapter 15.
4. The term 'investment entities' comprises investment trusts, venture capital trusts and other domestic and overseas investment companies, including property investment companies. Unlike authorised unit trusts and open-ended investment companies, such entities are not authorised products under the FSA's regime for authorised collective investment schemes. Rather, they are companies which, if listed, are subject to the listing regime.
5. The FSA regulates the financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; securing the appropriate degree of protection for consumers; and fighting financial crime.
6. The FSA aims to promote efficient, orderly and fair markets, help retail consumers achieve a fair deal and improve its business capability and effectiveness.