UK FCA to strengthen regulation in SPACs

Rick Steves

The regulator is considering structural features and enhanced disclosure, including a minimum market capitalization and a redemption option for investors.

The Financial Conduct Authority, UK’s financial watchdog, has confirmed it will be consulting shortly on amendments to rules and regulation pertaining to Special Purpose Acquisition Companies (SPACs).

The Listing Rules and related guidance will be revised to strengthen protections for investors, according to the FCA.

The regulator is considering the structural features and enhanced disclosure, including a minimum market capitalization and a redemption option for investors, required to provide appropriate investor protection.

FCA’s proposals aims to ensure that SPACs operate within a framework of high regulatory standards and oversight, the regulator stated.

“Where such protections are in place, we consider that the existing presumption of suspension of the listing for such companies at the point of announcement of an acquisition target is no longer required and we, therefore, intend to consult on this basis, aligning this element of our rules more closely with other major jurisdictions”, said the announcement.

The FCA will have the consultation open for a 4-week period. Feedback from the full range of stakeholders will be taken into consideration as the regulator designs the new rules and/or guidance by early summer.

SPACs have become the new trend in buyouts. UK’s chancellor, Rishi Sunak, has recently jumped on the bandwagon and commissioned a review of the London Stock Exchange rules. The government review led by former EU commissioner Jonathan Hill has made the loosening of restrictions on SPACs a priority.

The review suggested removing a requirement for trading in SPAC shares to be suspended during a takeover so investors have time to scrutinize the deal.

The United States is way ahead in the race for SPACs. Most recently, eToro has announced it is going public via SPAC after reaching a deal with FinTech V with an estimated implied equity value of approximately $10.4 billion.

The deal will retain 91% ownership for existing equity holders and the combined company will operate as eToro Group Ltd. and is expected to be listed on NASDAQ.

The SPAC craze has already led the SEC to issue a warning to investors amid the growing trend of celebrity endorsements of special purpose acquisition companies.

“SPAC sponsors generally acquire equity in the SPAC at more favorable terms than investors in the IPO or subsequent investors on the open market. As a result, the sponsors will benefit more than investors from the SPAC’s completion of a business combination and may have an incentive to complete a transaction on terms that may be less favorable to you”, said the SEC statement.

 

Read this next

Uncategorized

Moscow Exchange reports $350 billion in November FX volumes

FX trading volumes continued its upward momentum at Moscow Exchange (MOEX) during November, buoyed by a steady rise in volatility coupled with a multi-year effort to bring new business to the platform.

Retail FX

Interactive Brokers’ volumes continue growth trajectory in November

Interactive Brokers LLC (NASDAQ:IBKR) has announced higher trading volumes in November, dwarfing the metrics for October and the same period last year by 20 percent.

Retail FX

Exness trading volume hits record highs for second consecutive ‎month

FX broker Exness’ trading volumes have breached new highs in November, building on the record-breaking turnover streak from the beginning of the fourth quarter. That has been aided by the economic impact from the Covid-19 developments and inflation concerns that apparently sent investors hunting for FX instruments to limit their risk exposure.

Institutional FX

Hedge-fund legend Steven Cohen invests in Dmitri Galinov’s 24 Exchange

24 Exchange, the OTC platform backed by Fastmatch founder Dmitri Galinov, has completed a fresh fundraising round of $14.25 million at an undisclosed valuation. The recent capital injection was led by Point72 Ventures, the venture capital firm of the hedge fund titan Steven Cohen.

Digital Assets

Can Coinbase make or break XRP? – (Congress, XRP rating, JP Morgan)

According to Coinbase’s Council, XRP has the highest rating among 28 cryptos – meaning it is the closest you can get to a security: 4 out of 5.

Digital Assets

Polygon (MATIC) delves deeper into blockchain gaming by partnering with GameOn

Polygon, the Layer 2 scaling solution for Ethereum, has announced a partnership with GameOn Entertainment to build new and different types of NFT games on the network as it seeks to expand into the blockchain gaming and NFT space in a major way.

Retail FX

David Beckham to promote GemForex across Asia

GemForex makes efforts to lead in trading conditions, execution times, safety of client funds and data security, according to the FX and CFD broker holding a Mauritius Financial License.

Retail FX

InstaForex extends sponsorship deal with Borussia Dortmund after German Cup win

InstaForex provides access to trading of forex, CFDs, stocks, futures, options, and cryptocurrencies as the FX industry goes multi asset to address the needs of an increasingly demanding client base. 

Digital Assets

Treasury Secretary Yellen still cant decide on digital dollar

Treasury Secretary of the US, Janet Yellen, has said that she still is not sure whether the US should go ahead and have the digital dollar and follow the example of other major countries including China and India in introducing the same.

<