Recent market and regulatory developments for QCA members

25th March 2020

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In light of the unprecedented events surrounding the COVID-19 pandemic, there have been some significant market developments that we would like to make you aware of.

On Friday, the London Stock Exchange published an Inside AIM article setting out temporary measures to be implemented to support AIM companies and nominated advisers as they navigate the challenges arising from the current crisis.

The key measures relate to:

  • The temporary suspension of trading – where an AIM company requires more time to issue a fully compliant notification, the Nomad should approach AIM Regulation to discuss whether a temporary suspension is required.
  • Suspended AIM companies – the LSE will cancel the admission of AIM securities which have been suspended from trading for six months, to 12 months.
  • Engagement responsibilities for Nomads – the Exchange will temporarily suspend the requirement for a Nomad to make a physical site visit to a new client where travel restrictions and social distancing measures are implemented, provided the Nomad uses alternative measures, such as a virtual meeting.

In addition to the above, the Exchange continues to work to ensure the orderly functioning of the market. There are several measures in place to ensure the continuity of this. For instance, the Market Surveillance team employs mechanisms, such as circuit breakers and price monitoring extensions, that pause and delay auctions if certain price movement tolerances are breached, which are likely to occur frequently during periods of extreme market volatility. 

The LSE are continuing to provide information for issuers on the Issuer Services website, which includes information on how issuers can address some of the practical challenges in holding shareholder and investor meetings.  

Elsewhere, the FCA has issued a request to companies that they delay the publication of their preliminary financial statements. The FCA have written to all listed companies intending to publish their preliminary financial statements over the next few days asking them to delay their publications for at least two weeks.

The request does not include any form of corporate reporting other than the preliminary financial statements and it is not compulsory for Main Market companies to follow.

AIM companies are not required under the AIM Rules to issue preliminary financial statements, meaning that this request will not apply to the vast majority of AIM companies. If, however, AIM companies have decided to voluntarily follow Main Market convention by publishing preliminary financial statements, they should give consideration to the FCA’s guidance.

The justification for the moratorium is in response to the rapidly changing basis on which companies are reporting. As such, the FCA are requesting a delay in order to ensure that due consideration is given by companies to these events in preparing disclosure for their preliminary financial statements.

The FCA is currently working in conjunction with the FRC and PRA with the intention of producing a package of measures aimed at ensuring companies prepare the appropriate disclosures and address the current challenges. The FRC has expressed its support for the FCA’s request for a moratorium.

Andy Crossley
Chair, Primary Markets Expert Group, QCA

Jon Gerty
Chair, Secondary Markets Expert Group, QCA

Matt Howells
Chair, Accounting, Auditing and Financial Reporting Expert Group, QCA

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