Poring over prospectus regime ‘won’t help retail investors access IPOs’

interactive investor comments on the Treasury consultation.

The Treasury’s consultation on the UK Prospectus Regime closed Friday 24 September, moving forward with Lord Hill’s proposed UK listing rules reforms.

Aimed at attracting the most innovative firms to the UK and stimulating growth, another point of reference was how reform could facilitate retail investor access to IPOs.

interactive investor, the UK’s second largest direct to consumer investment platform, has responded to the consultation, and has been campaigning on the issue of retail investor access to IPOs. While welcoming of reform of the prospectus regime, ii does not believe that it will help private investors come in from the cold.

Richard Wilson, CEO, interactive investor, says: “We welcome simplification of the prospectus regime, but these documents alone won’t solve the IPO access problem for retail investors. Without real change, private investors will still be left out in the cold, rendering the consultation a lost opportunity.

“Given banks have no incentive to see the money go to retail investors, we favour a quota system which compels companies to involve ordinary investors when they float, as is the case in France and Singapore.

“Retail shareholders have been almost completely ignored when it comes to the vast majority of IPOs, which still take place between city institutions behind closed doors.

“It isn’t just private investors who stand to gain from reform. Retail investors provide an additional source of capital and can generate increased demand for the IPO. They can help raise the profile of the business and deepen relationships with loyal customers. And it can also create a healthy shareholder base – most retail investors are long term holders via pensions and ISAs and supportive of management, creating shareholder diversification and pricing stability.”