This discussion paper represents a missed opportunity by the FSA. The paper does not properly consider the role of AIM, or how important it is in promoting the UK as a jurisdiction in which to trade, if not list, shares. 

This is, of course, as a result of AIM merely being a trading platform, rather than a market for listed securities – thanks to our regulators cleverly stepping around the perils of EU legislation. But this disregards the fact that for those outside the closed circle of City experts, an AIM listing seems to be every much a "listing" as that on the Official List. 

More importantly, in the battle between London and New York for listings, AIM is aggregated with the Official List as part of a coherent listing regime – and one which the SEC attacks with frequency and vigour as a competitor to its domestic markets."

The proposed new regime for equities (which looks suspiciously similar to the old) is: Official list – "Tier 1" – the gold standard – super-equivalent to the minimum standards prevailing in Europe. This may continue be the most attractive market for fund managers as sponsors, corporate governance, pre-emption and adherence to the Takeover Code (or at least comply or explain) are very much still de rigeur.  Secondary Listing – "Tier 2" – "a secondary listing on a regulated market overseen by the FSA.”  No need for sponsors or to comply with the UK’s super-equivalent provisions. This would be a more relaxed regime, potentially open to UK companies not wishing to comply with the Official List requirements or suffer the pains of  complying with the needs of their NOMADS. It’s potential investor base would, one presumes, be limited to those with sufficient expertise to ensure an understanding of issuers’ offerings. This would be a market similar to something like Dubai’s International Financial Exchange. AIM – a market for non-listed securities in which a company’s NOMAD assesses its suitability for listing and ensures its compliance with the market’s rules. The FSA will continue to regulate the NOMADs and, at the present time (in response to wild assertions by employees of the SEC), does so with increased vigour. Plus – Does not appear to merit comment by the UKLA. The FSA is clearly in a quandary about how to regulate all those foreign companies who find the London markets so attractive for their listings but its failure to address the UK’s equity capital markets in their totality as part of this review, is a wasted opportunity. The Listing Review, as currently cast, appears to be little more than a re-labelling exercise." *Catherine Moss is a corporate partner at national law firm Halliwells. The paper is now open for consultation until 14 April 2008.

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