A stable, well-functioning financial market for allA stable, well-functioning financial market for allNew issues and initial public offerings – are safeguards working for investors?
Finansinspektionen (FI) has examined how securities institutions and issuersfollow the regulations for new issues and initial public offerings and whetherthere are risks or problems not covered by the regulation.
The results of the study are positive. We have not uncovered any abuses that would indicate that the reviewed securities institutions or issuers are breaking the law.
Neither have we identified any serious abuses not covered by the regulation. However, in a number of areas we were able to point out weaknesses and procedures that could be improved in order to increase protection for investors.
- The present legislation regarding the documentation in log books of disseminated insider information only covers firms that are listed in regulated marketplaces. However, unregulated marketplaces can still impose this type of requirement on traded firms. The requirement for log books facilitates inspection of the marketplace and FI's regulation of market abuse, and should reduce the risk of prohibited insider trading. Such a requirement should strengthen confidence in the traded firms and the marketplace. In the past FI has written to the Swedish Ministry of Finance and advocated change to the legislation in this area.
- There are no rules governing how guarantees linked to issues should be formulated and what collateral is required. An undertaking that could not be fulfilled with certainty would probably not be perceived as a guarantee by the investor if the investor knew about those circumstances. Because of this FI will impose stricter requirements on information regarding the value of guarantees when reviewing prospectuses.
- Conditional trading or pre-trading through stock exchange systems, to which not all investors have access, may be experienced as unfair. FI considers that open and transparent trading is preferable to restricted trading to which only a few investors have access, but that the risks in connection with this must be made clear in the prospectus. In the long-term all investors should be offered the opportunity since limitations are mainly a technical issue.
In the report we have not reviewed any public acquisitions. Tendering situations are often more complex and will therefore be the object of a separate investigation.
Authors: Robert D'Agostino, Patrik Hellgren, Veronica Fröderberg
