Key voices in regulated financial services, across the United Kingdom, have come together to secure pathways for investor access to Regulated Bonds by creating a working group.
The Investor Access to Regulated Bonds Working Group (IARB) has been spearheaded by Head of Fixed Income at Winterflood Securities, Stacey Parsons, and Tom Capon, Chair of think tank City Future, who have supported engagement of this conversation, since the fall out from the mini bond scandal, with Stacey Parsons and Tom Capon acting as Chair and Deputy Chair of IARB, respectively.
Members of IARB include long standing regulated counterparts such as Brewin Dolphin, Investec Wealth & Investment, Killik & Co, Rathbone Investment Management, along with London Stock Exchange plc, leading retail investment platform Hargreaves Lansdown and trade associations such as the Association of Corporate Treasurers and UKEMA. Think tank City Future will act as co-sponsor and management consultancy Goodacre as supportive sponsor.
The Investor Access to Regulated Bonds (IARB) Working Group aims to accelerate dialogue at a crucial time of change in UK financial services regulation. The formation of the group aligns with comments made by Mel Stride of the Treasury Select Committee stating that the Treasury should require the FCA to have regard for financial inclusion in its rulemaking.
In April 2022, in response to their consultation, HMT acknowledged the need to address an “artificial incentive to issue non-equity securities in high denominations”. Many in the regulated environment will know this to be the €100,000-entry threshold, that, in combination with several other factors – leaves many smaller counterparties and investors unable to invest in high quality bonds, here in the UK.
Some positive, albeit small steps, were made earlier this year by the FCA with regard to PRIIPs and its applicability to bond issuances. However, IARB believes there is much more to be done.
In line with regulatory imperatives, the working group has pledged to secure improved investor and discretionary wealth manager access to regulated transferable bonds, with lower denominated issuances (the wholesale thresholds).
Stacey Parsons, IARB Chair, commented on the announcement: “The creation of the working group is a positive step towards engaging regulators and policy makers at a pivotal time for Financial Services Legislation in the UK. The initial round table meeting was met with much support, and we look forward to adding a greater diversity of members to the group as we seek to engage industry bodies on the challenges faced by issuers in the delivery of straight forward issuances to support lower denominated bonds”
Tom Lee, Head of Trading Proposition, Hargreaves Lansdown: “As the UK’s largest savings and investment service, we are committed to levelling the playing field, ensuring that the retail investor is able to access the same opportunities as institutional investors. Improving the access to high-quality debt as an asset class will give individual investors better opportunities to create diversified investment portfolios with predictable income streams. We look forward to working with IARB members towards this goal.”