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Breaking the Bank: Time to End the IPO Rort

Since Smartkarma’s founding, our contributors have provided Independent and unconflicted opinion on upcoming IPOs. We have worked hard to build the tools, analytics, and processes necessary for independent analysts to produce meaningful and valuable independent opinion. We have now covered over 185 IPOs across 11 countries in the AsiaPac region.

We strive to do much more, but accessing information that is tightly controlled by the issuer and more importantly, the issuer’s banks, has been a constant pain point. More so in some countries than others, but a constant pain nonetheless.

Thankfully the importance of independent research in this field is now being recognised by regulators. The UK’s FCA recently released a consultation paper titled “Reforming the availability of information in the UK equity IPO process”.

It asks for submissions, and we had earlier told Smartkarma Insight Providers that we intended, on their behalf, to provide one.

This Insight details our intended submission and highlights the main points and shortcomings that we will raise. Our goal is to improve the quality of research produced by Independent Insight Providers, and in so doing improve transparency and reduce the conflicts currently present in Equity Capital Markets. We intend to lodge our submission to the FCA in a week's time.

It is important to note that whilst the FCA’s focus is on reforming the UK IPO market, there are important ramifications for markets in Asia. In our opinion, Asia’s worst offender is Australia. Australia’s rules, overseen by ASIC, are based heavily on current FCA practices and completely shut out Independent Research Providers. This has arguably produced a  flawed “closed shop” model that does not benefit investors. We believe that the FCA’s move will encourage regulators such as ASIC to consider their own reforms.

This is an important tailwind not just for IPO research but for all Independent Research Providers. It is just the first of many steps needed to level the playing field. We hope you may have ideas and comments to add; we would appreciate your input in the discussion section of this Insight, or alternatively by messaging the Smartkarma team directly.

This insight is part of Smartkarma. For more follow this link.

This post first appeared on Smartkarma | Intelligent Investing, please read the originial post: here

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Breaking the Bank: Time to End the IPO Rort


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