Dual disclosure standard

Bonds - wholesale - retail - regulation - disclosure - UK - Financial Conduct Authority (FCA).

The UK requires more disclosure for issuances of bonds with a denomination below €100,000 than for bonds with a denomination at or above €100,000.

This dual disclosure standard was intended to protect retail investors.

It also created an incentive for issuers to issue high denomination bonds to avoid the additional disclosure obligations for lower denomination bonds.

Single bond disclosure standard expected

"The FCA is now proposing to adopt a single standard for bond disclosures, which could re-open the retail corporate bond market that had been closed by regulatory changes nearly 20 years ago.

Nikhil Rathi, the FCA's CEO, told the treasury forum: 'This is so important for buy-in to our capital markets and our capitalist system that retail, and individual investors and employees can participate. Advisers can sometimes be a bit nervous about this, but we hope that people do embrace it.'"

FCA boss hints at adopting wider access to bond market ‘this year’ - Philip Smith - The Treasurer online - June 2024.

Main divergences in dual disclosure standard

"Most saliently, the two standards diverge as follows:

• Only prospectuses for retail securities must include a summary.
• In retail prospectuses, additional details on the issuer’s history and development, trends, business and share capital are required, as well as inclusion of cash flow statements and quarterly or half yearly financial information.
• More permissive requirements in regards to accounting standards for wholesale prospectuses.
• Retail disclosure standard requires details of the offer of securities to the public and additional narrative explaining certain complex features."

Main differences between retail and wholesale disclosure requirements - FCA - Engagement Paper 4: Non-equity securities - May 2023 - p7.

See also

• Admission to trading
• Association of Corporate Treasurers (ACT)
• Bond
• Corporate bond
• Denomination
• Disclosure
• Financial Conduct Authority (FCA)
• Investor
• Issuer
• Offer for sale
• Order book for Retail Bonds (ORB)
• Primary market
• Prospectus
• Prospectus Directive
• Regime
• Regulation
• Retail
• Retail bond
• Seasoned issuer
• Security
• Wholesale bond
• Wholesale markets

Other resources

• Engagement feedback on the new public offers and admissions to trading regime - Financial Conduct Authority (FCA) - December 2023

• FCA boss hints at adopting wider access to bond market ‘this year’ - Philip Smith - The Treasurer online - June 2024

• Speech by Nikhil Rathi, FCA Chief Executive, delivered at the Association of Corporate Treasurers Annual Conference 2024

• Engagement paper - non-equity securities - FCA - May 2023