Reflections on the European High Yield Conference
James Fox and Zim Ceko attended last week's Annual European High Yield Conference (AFME). One of the topics discussed was the impact of Brexit on European capital markets and discussions on the latest listing trends and initiatives taken in the context of the European Union’s Market Abuse Regulation (Regulation 596/2014) (MAR).
TISE’s Share of the Market
It was noted at the conference that The International Stock Exchange’s (TISE) share of high yield bond listings now accounts for approximately 20% of all high yield bond listings in Europe, this increase largely taking place following the introduction of MAR. MAR’s introduction prompted significant interest from issuers and advisers, especially from the European Union (EU), to either bring new issues to TISE or migrate currently listed securities from EU exchanges.
During a panel session, delegates were able to vote on certain key issues and over 60% of them agreed that the key issue for issuers and advisers regarding MAR is the requirement to draw up ‘insider lists’, which is a list of all persons who have access to inside information and who are working for them under a contract of employment, or otherwise performing tasks through which they have access to inside information, such as advisers, accountants or credit rating agencies.
Issuers are required to update the list every time any of the changes specified in Article 18(4)(a)-(c) of MAR occur (e.g. where a person ceases to have access to inside information) and have to provide such insider lists to the competent authority as soon as possible upon its request. Such requirements are not only burdensome and costly for issuers but also apply equally to all types of securities and are generally viewed as disproportionately onerous for specialist securities such as high yield bonds.
It was noted at the conference that the European Commission’s Expert Group on corporate bonds markets in response has recommended easing market abuse rules to boost the corporate bond market. In addition, EU regulators are now investigating the possible introduction of a ‘lighter’ MAR regime for SME Growth Markets. It is unclear when or whether any of these initiatives will be implemented. It also seems unusual to lower or reduce requirements which are designed to increase investor protection once they have been implemented.
The Crown Dependencies not part of the EU
Unlike most of the leading exchanges in Europe, TISE is based outside of the EU and MAR does not apply to securities listed on TISE.
Although not subject to MAR, TISE still maintains robust market abuse rules which are applied proportionately to the type of securities listed and will increasingly be of interest to issuers and advisers from the EU.
Appleby as Listing Member
Appleby Securities (Channel Islands) Limited acts as a sponsor for listing purposes, is a full listing member of TISE and can provide high quality, cost-effective professional services in all aspects of structuring and documenting high yield issues.