UK Conduct Regulator Makes Permanent Ban on Marketing Speculative Illiquid Securities to Retail Investors

The U.K. Financial Conduct Authority has made permanent its temporary ban on the marketing of speculative illiquid securities to retail investors. A temporary product intervention measure was introduced on January 1, 2020 for a period of one year while the FCA consulted on making the ban permanent. The measure restricted the mass-marketing of non-transferable bonds (sometimes colloquially termed "mini-bonds") and preference shares to retail investors and required improved disclosure to be made to high-net-worth and sophisticated investors.

The FCA has now confirmed that, from January 1, 2021, the temporary measures will be made permanent in the form consulted on, with certain minor amendments, including:
 

• clarification that debt securities issued by an investment trust are excluded from the new rules;
• clarification to the definitions of "single-company holding vehicle" and "single company" for the purposes of the exclusion for SPV structures for single-company investments; and
• removing a caveat to the exemption for fundraising by companies that issue securities to fund ordinary business activity, to ensure that businesses that use the proceeds of an issue to buy assets that are used by the issuer or a group member for general commercial or industrial purposes will not fall within the ban.

View the FCA's Policy Statement.

View details of the FCA's consultation on marketing speculative illiquid securities to retail investors.

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