FCA Begins Consulting on Looser SPAC Rules in Bid to Grab Market

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(Bloomberg) — Britain’s market watchdog plans to revise disclosure rules for blank-check firms by the summer, which could help remove a key obstacle to their taking off in the U.K. market.

© Bloomberg Financial Conduct Authority (FCA) in the Canary Wharf business district in London, U.K.

The Financial Conduct Authority said it will shortly be consulting on changes to listing rules that will align its regulations closer to markets like New York and Amsterdam, according to a statement Wednesday. The additional disclosure and redemption protections, the FCA said, will then no longer require such companies to suspend their listing when they announce an acquisition.

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London has missed out on the boom for SPACs that has swept Wall Street, Amsterdam and beyond, with $83 billion raised last year alone. More recently, the market has faltered amid worries about a bubble; an index of SPAC listings has fallen by about a fifth since its February high.

U.K. markets have been stymied by rules requiring these cash shells to pause trading their shares once they have found a business to acquire, to shield investors from price jolts while the deal is done.

“The consultation will consider the structural features and enhanced disclosure, including a minimum market capitalization and a redemption option for investors,” the FCA said in the statement. “Where such protections are in place, we consider that the existing presumption of suspension of the listing for such companies at the point of announcement of an acquisition target is no longer required.”

The move is part of wide-ranging reforms intended to boost the attractiveness of London after Brexit. Chancellor of the Exchequer Rishi Sunak has said the government will act quickly to boost London’s standing among investors, saying in a statement this month that “we’re determined to enhance this reputation now we’ve left the EU.”

Read more about the post-Brexit market overhaul

The consultation will be open for a four week period, the FCA said. It said it would aim to make the new rules or guidance by early summer.

(Updates with SPAC index in third paragraph.)

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