UK IPO information flows – FCA listens to feedback and proposes changes to COBS rules

Background to the FCA 2018 reforms

In July 2018, the FCA introduced a package of rules designed to improve the quality and availability of information during the UK equity IPO process. Overall, the reforms sought to address perceived risks of bias in connected research coverage, promote the availability of unconnected research and ensure that an FCA-approved prospectus was the primary source of information for investors in an IPO process.

Specifically, the 2018 changes to the COBS rules:

• prevent connected research from being published before a registration document or prospectus, reaffirming the prospectus's key role in IPOs;
• require banks to give unconnected analysts the same information as connected ones, and mandate a 7-day delay before connected research is published, allowing unconnected analysts time to prepare their reports; and
• strengthen analyst-issuer interactions with updated Handbook guidance and tighter MiFID II restrictions prohibiting contact before a mandate is granted.

Consequently, the publication of the FCA-approved prospectus or registration document mark the start of the ‘public-phase’ in the IPO process, with the subsequent publication of research reports. Issuers and their advisers could then determine whether to:

• invite a selection of unconnected analysts to the same analyst briefing as connected analysts, which typically takes place around 6 weeks ahead of the first public announcement of an IPO. Firms would then be able to publish connected research the day after the approved registration document or prospectus; or
• delay the publication of any connected research by 7 days following the publication of the approved registration document or prospectus and provide equal information to any unconnected analysts who request access in this period.

Have the reforms achieved their aims?

Since the changes were introduced, the FCA notes that joint briefings with connected and unconnected analysts have rarely been conducted in practice, due to commercial considerations and the increased risk of deals being inadvertently leaked in advance of an ITF announcement. In practice, this has meant that issuers have had to opt for a ‘7 day-delay’ by default, unnecessarily extending the IPO process and consequently, putting the UK at a comparative disadvantage relative to other listing venues. Additionally, the FCA understands that the changes allowing unconnected analysts equal access to information have not led to the increase in independent research reports, which have been found to be limited in detail and not widely distributed.

What are the proposed changes?

In CP 26/14, the FCA proposes two principal changes to the COBS 11A unconnected analyst rules: 

Removal of the 7-day waiting period for connected research. The FCA proposes to amend COBS 11A.1.4FR to remove the 1-day/7-day waiting period between the publication of an approved registration document or prospectus and the publication of connected research.   Firms will be able to publish the approved registration document or prospectus and any connected research simultaneously.

Removal of the equal information sharing requirements. The FCA proposes to remove COBS 11A.1.4BR to COBS 11A.1.4ER, which mandate that syndicate banks intending to publish connected IPO research share the same information with a range of unconnected analysts as they do with their own research analysts.

Consequently, the indicative timeline for an IPO would look as follows:

^{FCA CP 26/14 - Figure 2: Indicative timeline of key events during equity IPO process, following proposed changes.}

The FCA emphasises that the rule changes would not prevent unconnected analysts from requesting information from issuers in order to produce research, or from attending analyst briefings. Indeed, issuers and unconnected analysts will be able to contact each other directly to discuss research coverage.

Technical amendment to COBS 12.2.21R

The FCA is also taking the opportunity to correct a technical drafting error in COBS 12.2.21R(1)(f), introduced when the MiFID Organisational Regulation was transferred to the Handbook. The current wording inadvertently changed the meaning and may be interpreted as more restrictive on firms than intended. The FCA proposes to revert to the original drafting.

Further opportunities for reform

Although the FCA is not consulting on further changes at this stage, it seeks feedback on the following discussion questions on the remaining aspects of the 2018 rules in order to explore further opportunities for reform:

• Timing of the registration document — whether the requirement to publish an approved prospectus/registration document before (or simultaneously with) connected research is beneficial, and whether alternative approaches should be considered.
• COBS 12 restrictions on pre-mandate analyst and issuer communications — whether the current rules and guidance on analyst and issuer interactions remain appropriate, noting feedback that they may be stricter than in the US and EU and could put the UK at a competitive disadvantage.

Next steps

The proposals represent a concerted effort by the FCA to address consistent market feedback on the 2018 reforms and form part of the UK regulator’s broader strategy to support growth and improve the competitiveness of the UK as a listing venue. Responses to the consultation are requested by 29 May 2026, following which the FCA will consider the feedback and publish a policy statement subject to finalising the rules.

Authored by Daniel Simons and Danette Antao.