We will consult in June on a unitary regime for investment entities that we will implement in the first quarter of 2008.

We will implement an interim regime in the third quarter of 2007 and will launch a wider debate on the role and scope of the overall listing regime.

Our second consultation on changes to the listing rules for investment entities (CP06/21) closed on 28 February. We have received a large number of responses from a broad spectrum of interests, including investors, practitioners, listed companies and trade bodies. We plan to publish our detailed Feedback Statement (FS) in June.

One of the key issues we consulted on was whether to allow overseas investment entities to have secondary – or EU directive – listings under Chapter 14 of the Listing Rules1. Nearly all respondents commented on this issue and we recognise market participants need to have certainty as to our future policy intentions. So we said last December that we would update stakeholders on this particular aspect of the consultation as soon as we had made a decision, rather than waiting until the full FS is published.

It is important to recall that, as well as seeking appropriate protection for investors, we have a statutory duty under the Financial Services and Markets Act when we make rules in our capacity as UK Listing Authority to have regard to the international character of capital markets and the desirability of maintaining the competitive position of the UK. The UK is part of a single European capital market. Shares in investment companies listed on European exchanges which impose substantially similar obligations to those in Chapter 14 can be, and are being, traded by UK investors2. We proposed to continue providing the facility to list shares in the UK on the same basis, but subject to very clear labelling. We argued that the availability of a directive minimum regime could be attractive to less traditional funds, such as some private equity and hedge funds, which are now looking to secure more permanent sources of capital through public offerings.

Respondents agreed that we should aim to make the UK listing regime more attractive for less traditional funds. But achieving that outcome through a regime which offered Chapter 14 alongside, and as an alternative to, the super-equivalent Chapter 15 rules did not command sufficient support from stakeholders. Many respondents argued that the same goal of opening up the market to less traditional funds while keeping the right balance between investor protection and competitive attractiveness would be better achieved through modifying Chapter 15.

After considering these options we intend to proceed on the basis of a single platform for all listed closed-ended investment funds, irrespective of domicile. We will publish a further Consultation Paper in June proposing possible implementing measures for such a platform. It is likely that it will be based on the broad framework for Chapter 15 set out in CP06/21. However, the June consultation will explore the extent to which further de-regulatory measures beyond those envisaged in CP06/21 can enhance the international attractiveness of the UK listing regime for investment entities, while maintaining appropriate protections.

We still plan to implement in the third quarter of 2007 those modernisation measures we have proposed already for Chapter 15 which have received widespread support. We will include further details in our June paper. Depending on the outcome of the next round of consultation, the eventual single platform may embody further changes, and we envisage it will be in place in the first quarter of 2008. Pending implementation of the single platform, Chapter 14 will remain open to new applications by overseas investment entities. Any such new applicants and those overseas investment entities already listed under Chapter 14 would remain listed under Chapter 14 after the single platform is implemented, unless they chose otherwise.

CP06/21 has also coincided with a wider, albeit more informal, debate about the structure and quality of the UK's listed markets, the rights of participants in them, and their relation to other markets both in the UK and overseas. This debate is against a background of a developing single European capital market and increased listing activity by non-UK companies in London. We welcome that debate, and we believe it is important that it takes place against a full understanding of how markets are evolving, and the role and scope of the listing regime, including our governance requirements. So we plan to formalise that debate through discussions with stakeholders over the next few months, with the aim of publishing either a Discussion or Consultation Paper later in the year. In particular, we plan to develop our thinking about how we can achieve greater clarity over the regulation of the various categories of securities (such as equities, Global Depositary Receipts, securitised derivatives and debt) that overseas and UK issuers and investors can now respectively list and access.

1Such listings impose only the minimum obligations the underlying European directive governing listing requires us to impose, rather than the requirements of a full listing. Under current secondary listing rules, there is no requirement for issuers to have another listing elsewhere.

2Among other things, investment entities subject to Chapter 14 of the Listing Rules are not required to adhere to the diversification limits on investment portfolios, board independence rules or the limits on cross-holdings set out in Chapter 15.

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