Watchdog proposes making Britain more attractive for debt trading

By Huw Jones

LONDON, Feb 14 (Reuters) - Britain should look at developing a new debt trading venue that could compete better with popular markets in Luxembourg and Ireland (Other OTC: IRLD - news) in the post-Brexit era, the country's financial watchdog said on Tuesday.

The proposals were set out in a Financial Conduct Authority (FCA) review of how to make it easier to list companies, bonds and funds to try to increase the flow of money into fast growing industries, particularly in science and technology.

The listing regime used by the London Stock Exchange (Other OTC: LDNXF - news) could be "usefully reconsidered" for overseas companies, the watchdog said - a key issue given that Britain is set to leave the European Union and wants to maintain London's attractiveness as a global financial centre.

Currently, foreign companies are offered several ways to list their securities and making this more flexible would make such companies more accessible to a wider range of investors, the FCA said.

"This review considers some important questions about the primary markets, and some potential enhancements, to ensure they continue to meet the needs of investors and issuers effectively," FCA Chief Executive Andrew Bailey said in a statement.

The review said Britain had no market equivalent to the Irish GEM market or Luxembourg's EuroMTF market – specialist trading platforms focused on institutional investors and which have achieved considerable success.

"Our soundings... suggest this might be attractive as a 'global debt' option for large, emerging market issuers without an equity listing in the EU," the FCA said.

"The past year has seen, for example, great interest in Rupee-dominated bonds issued to international investors in markets outside India. Similarly, Chinese state-owned banks have accessed EU debt capital markets."

The review also looks at whether the watchdog should take steps to encourage the participation of small investors in bond markets.

The watchdog said it was also examining the boundary between a premium company listing, which requires higher standards, and the so-called standard regime to "improve effectiveness for issuers and investors".

The FCA said it might also ease the rules for listing exchange-traded-funds or ETFs (Shenzhen: 395013.SZ - news) .

(Reporting by Huw Jones; Editing by Keith Weir)