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Capital Markets Update: October 2023

Welcome to the current edition of Capital Markets Update, the monthly briefing from our Corporate Group rounding up the previous month’s regulatory developments within the equity capital market and looking ahead to future developments.

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Capital Markets: September’s news

Financial promotion regulations made

On 6 September 2023, the Financial Services and Markets Act 2000 (Exemptions from Financial Promotion General Requirement) Regulations 2023 were laid before Parliament and published together with an Explanatory Memorandum. The regulations will operate from 7 February 2024 and require any authorised person who wishes to approve financial promotions of an unauthorised person to obtain prior permission from the FCA. The regulations came into force on 27 September 2023.

Crypto asset firms given more time to prepare for the new financial promotions regime

On 7 September 2023, the Financial Conduct Authority (FCA) announced that it will consider giving crypto asset firms more time to implement certain aspects of the new financial promotions regime. Firms could be granted until 8 January 2024 to introduce features that require technical development, although the ‘core’ rules will still come into effect from 8 October 2023.

Rules published on operation of new gateway for approval of financial promotions

On 12 September 2023, the FCA published Policy Statement 23/13 in which it sets out its final policy position and response to feedback received in relation to its earlier consultation on introducing a gateway for firms that approve financial promotions. PS 23/13 supports legislative changes introduced by the Financial Services and Markets Act 2023 and ensures that, once the new gateway comes into effect, all authorised persons who want to continue to approve financial promotions for unauthorised persons will need to apply to the FCA for permission to do so.

CLLS publishes response to corporate governance code consultation

On 13 September, the City of London Law Society (CLLS) published its response to the Financial Reporting Council’s (FRC) consultation on the UK corporate governance code. In its response, CLLS stated that avoiding duplication and increasing proportionality will increase the code’s effectiveness.

TNFD publishes final version of framework for nature-related financial disclosures

On 19 September 2023, the Taskforce on Nature-related Financial Disclosures (TNFD) published the final version of its recommendations for a disclosure framework. The TNFD also published a suite of additional guidance and a glossary of key terms. The recommendations provide guidance for organisations to report on nature-related financial risks and opportunities, to support a shift in global financial flows away from nature-negative outcomes and towards nature-positive outcomes. They are designed for organisations of all sizes, across all sectors and along value chains.

CGI responds to consultation on UK corporate governance code

On 20 September 2023, the Chartered Governance Institute (CGI) published its response to the FRC consultation on the review of the UK corporate governance code. The response highlights the need to ensure that strong governance practices are not diluted when reviewing the code, while ensuring that reporting requirements do not impose an increasingly onerous burden on companies.

FCA publishes final warning to crypto asset firms

On 21 September 2023, the FCA published a final warning for crypto asset firms marketing to UK consumers and those supporting them to get ready for the financial promotion regime. Once the regime is in force, unauthorised and unregistered crypto businesses will only be able to communicate financial promotions which have been approved by an authorised person or are within the scope of certain narrow exemptions in the Financial Promotion Order.

FCA publishes listing arrangements over the Christmas period

On 22 September 2023, the FCA published details of its approach to listing transactions over Christmas and New Year 2023/24. It includes changes to the FCA’s standard turnaround times for reviewing documents and guidance requests, as well as the process for listing applications hearings.

Regulatory framework proposed for diversity and inclusion

On 25 September 2023, the FCA published a consultation paper looking at diversity and inclusion in the financial sector. The consultation contains proposals to introduce a new regulatory framework on diversity and inclusion.

ICMA updates sustainability-linked bonds Q&As

On 26 September 2023, the International Capital Market Association (ICMA) published an updated version of its Q&As for sustainability-linked bonds.

Compliance with the new financial promotion rules for high-risk investments

On 27 September 2023, the FCA published the findings from its review of how firms offering ‘Restricted Mass Market Investments’ have complied with the new financial promotion rules for high-risk investments.

FCA sets out supervisory strategy for corporate finance firms

On 28 September 2023, the FCA published a Dear CEO letter setting out its supervisory strategy for firms supervised in its corporate finance firms portfolio. The overall supervisory strategy will cover the following drivers of harm: unsuitable products to consumers, market abuse, financial crime including sanctions breaches, and financial resilience.

Looking ahead to October 2023

8 October – final Handbook rules to regulate the promotion of certain crypto assets come into force.

11 October – closing date for responses to the FRC’s call for evidence on the IFRS Sustainability Disclosure Standards.

12 October – HMRC consultation proposing new legislation to preserve current 0% charge to stamp duty and stamp duty reserve tax on UK share issues on overseas markets closes.

31 October – FRC consultation on proposed revisions to its Ethical Standard closes on this date.

John
Hamer

Chair of the LLP, Partner

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Debbie
Jackson

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Naish

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O'Gorman

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Duke

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Thomas
Mieszkowski

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