FSA consults on single guidance manual for listing

Michael Foot, Managing Director of the FSA, said:

The draft guidance manual and proposed changes to the listing rules we are publishing today are important to prepare issuers and their professional advisors for the introduction of the new legislation and ensure they will be ready when it comes into effect.

When the guidance manual is brought into force in the autumn, it should provide clarity to the industry and assist them in understanding how the FSA will use its new powers in this area. We have made as few changes as possible. It remains our intention to begin a fundamental and public review of the listing rules in due course.

Two of the main areas covered in the consultation paper and proposed guidance manual are:

• How the FSA will use its powers to discipline listed companies, directors, former directors and sponsors for breaches of the listing rules. When the FSA takes on its new powers, it will be able to fine listed companies and directors in addition to imposing a public censure ;

• The FSAs intention to require companies to notify them when they become aware that a director has breached the companys own code of dealing implementing the Model Code. The FSA may then require the company to make an announcement to the market on the circumstances of the breach of the code of dealing and any action taken by the company against the director.

In addition, the guidance manual contains, as an appendix, an updated version of the existing Guidance on the dissemination of price sensitive information. This guidance provides assistance to listed companies and their advisors in understanding what might constitute price sensitive information under the Listing Rules and how they should treat it.

Michael Foot said:

In updating the guidance on price sensitive information, the FSA is taking account of technological advances such as the internet and webcasting. It also deals with companies relations with analysts, how they should deal with press speculation and what companies should do if they have price sensitive news when the market is shut.

The underlying listing rules in this area have not changed but it is important that companies should understand how they should treat major news that might affect their share price in a material way.

Notes for editors

1. The FSA took over the role of UK Listing Authority from the London Stock Exchange on 1 May 2000. Like the rest of the FSA, the UKLA will take on new powers under the Financial Services and Markets Act 2000.

2. The detailed proposals are published in Consultation Paper 100 which accompanies the draft Guidance Manual. The Consultation Paper proposes amendments to the Listing Rules to bring them into line with the provisions of the Financial Services and Market Act. The draft Guidance Manual does not replace an existing document but does incorporate updated guidance in its appendices.

3. One of the appendices to the Guidance Manual is the updated Guidance on the dissemination of price sensitive information. This replaces the old guidance in this area which dated from 1996.

4. The Model Code is an appendix to the Listing Rules. Its purpose is to ensure that directors, certain employees and people connected with directors or employees do not abuse, and do not place themselves under suspicion of abusing price sensitive information. This applies to price sensitive information they may have, or be thought to have, especially in periods leading up to an announcement of results.

5. The FSA regulates the financial services industry and aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.