20 Aug 2018

AFME and Euro IRP publish guidance on how unconnected research analysts can access issuer information in UK IPOs

The Association for Financial Markets in Europe’s (AFME) Equity Capital Markets Division and the European Association for Independent Research Providers (Euro IRP) have today published guidance for unconnected analysts (i.e. those not employed by the underwriting syndicate) seeking to access information about prospective issuers under the UK Financial Conduct Authority’s (FCA) new rules governing initial public offerings (IPOs), which came into force on 1 July 2018. 

The AFME/Euro IRP guidance sets out a process by which syndicate banks can facilitate access for unconnected analysts to prospective issuers and contains guidelines which those unconnected analysts gaining access to companies undertaking an IPO are expected to sign. 

Under the new rules (as set out in FCA policy statement PS 17/23) relating to the UK IPO process, unconnected analysts must now be provided with access to company information and to the management team of the share issuer (if such access has been provided to connected analysts) before connected analysts (i.e. those employed by or connected to the underwriting bank syndicate) publish their own research. In line with the FCA’s aim, the AFME/Euro IRP guidance therefore seeks to ensure that assistance is given to market participants following the introduction of the new rules.

Andrew Brooke, Director of AFME’s Equity Capital Markets Division, said: “This guidance should provide potential investors, prospective issuers, banks and analysts with clarity regarding the process by which research on prospective issuers is made available in UK IPO transactions.  This will help to facilitate the efficient and coordinated execution of UK IPOs.”

Chris Deavin, Chairman of Euro IRP, said “These are important FCA reforms to the UK IPO process, which ensure for the first time, independent IPO research can be produced without barriers, and provide essential quality analysis at the right time to potential investors. This guidance defines the clear practical steps by which this will happen and should help market participants work in a UK IPO process that serves both investors and issuers.”

Benefits of the AFME/Euro IRP guidance:

Private companies, unconnected analysts and investors all stand to benefit from the clarity provided by the guidance. It should help provide clear and coordinated implementation of the new rules regarding unconnected analysts’ access to prospective issuers.

  • Private companies will benefit from better prepared and well-executed IPOs.
  • Investors/market participants will be provided with information about prospective issuers/IPOs from more sources and at an earlier point in the process.
  • Unconnected analysts will have clarity on how to access private companies/prospective issuers.

 The full guidance can be found here