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IOSCO keeps watch on SPACs as Britain eases the rules



The International Organization of Securities Commissions (IOSCO) said it has started monitoring the so-called special purpose acquisition companies (SPACs).

The global securities markets regulators have expressed their concerns over potential regulatory issues with SPACs.

SPACs are shell companies, listed on the stock market. The proceeds of that are then use to buy other companies.

While SPACs are not new and have been around for some time, transactions have surged recently, drawing regulatory attention. This form of investment sugared last year on Wall street and began to rise in Europe this year and it is now growing in the emerging markets.

The IOSCO said in a statement:

While SPACs may offer alternative sources of funding and provide opportunities for investors, they may also raise regulatory concerns.

IOSCO keeps watch on SPACs as Britain eases the rules

 

IOSCO’s members include U.S. Securities & Exchange Commission (SEC), the Financial Conduct Authority in Britain (FCA), as well as regulators in the European Union, Asia, Latin America and Africa. The Commissions’ new SPAC network met on Monday to share information.

Jean-Paul Servais, chairman of Belgium’s markets watchdog and Vice-Chair of IOSCO’s board, stated:

Jean-Paul Servais, esma iosco
Jean-Paul Servais

I am pleased that so many members of IOSCO have joined the SPACs network to exchange experiences on non-traditional IPOs via SPACs and discuss emerging issues related to investor protection and fair, orderly and efficient markets.

At the same time, Britain eased rules on SPACs in order to attract more listings to London. The FCA now plans to stop SPACs from being automatically suspended when they find a potential acquisition target. As this rule was putting off investors from the UK market, the the UK watchdog had proposed earlier in April to waive the suspension if a SPAC raised at least £200 million ($275.66 million) from its float. On Tuesday, the FCA cut this to £100 million.

FCA said in a statement:

The final rules aim to provide more flexibility to larger SPACs, provided they embed certain features that promote investor protection and the smooth operation of our markets.

The UK regulator said the threshold would be “appropriate to the relative size of likely targets in a UK context”.

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IOSCO keeps watch on SPACs as Britain eases the rules

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