Consultation on rulebooks for the ISDX Growth Market
On January 22, 2015 the ICAP Securities and Derivatives Exchange (ISDX) launched its market consultation in relation to proposed changes to the ISDX Growth Market Rules for Issuers and the ISDX Corporate Adviser Handbook following a review by ISDX. ISDX is seeking to realign the criteria in respect of companies seeking admission and to make the standards and requirements more appropriate for companies seeking an admission to an SME Growth Market. The proposed amendments include the following:
ISDX Rules for Issuers
- Rule 2(d) is to be amended to provide that, in addition to having appropriate arrangements for the electronic settlement of transactions in its securities, an issuer must also ensure that its securities are represented in electronic book-entry form in a central securities depository.
- Current Rule 4, which outlines the five tests and points in relation to an issuer’s eligibility and related guidance, is being deleted and it is proposed that the admission criteria will require a minimum of one year’s trading history for issuers together with a ten per cent free float of shares. One year’s working capital will also be required.
- The guidance note on Rule 4, which provides that issuers admitted to trading as of the entry into force of Rule 4 (July 9, 2013) would undergo an assessment 18 months after the entry into force of Rule 4, and where the issuer did not comply with Rule 4, their securities would be withdrawn from the ISDX Growth Market, is to be deleted.
- Rule 23 is being amended in relation to ISDX’s discretion to intervene in an application for admission from an issuer so that ISDX can delay or refuse admission in the event that an admission would be detrimental to investors’ interests or the integrity of the ISDX Growth Market.
ISDX Corporate Adviser Handbook
- An amendment to Rule 13(a) is proposed to require, as part of the application procedure, an applicant to provide at least two key corporate finance personnel who will be involved in carrying out the corporate adviser function. The guidance to Rule 13 also states that the corporate finance personnel must have practised as a corporate finance adviser for at least two years preceding the date of the application for ISDX corporate adviser membership and have had active involvement in at least three relevant transactions in the two year period preceding the date of the application for ISDX corporate adviser membership. An ISDX corporate adviser will be required to have at least two corporate finance employees at all times.
- A requirement is being introduced for an ISDX corporate adviser to perform satisfactory due diligence and suitability checks for both issuers applying for admission and issuers admitted to trading appointing a new ISDX corporate adviser.
- A new guidance note to Rule 36 provides that an ISDX corporate adviser should ensure that due diligence is undertaken in accordance with the ISDX practice note on due diligence and the working capital assessment is undertaken in accordance with the ISDX practice note on working capital for issuers seeking admission.ISDX has amended the due diligence regime for ISDX corporate advisers and is proposing to introduce a new practice note on due diligence. The practice note provides guidance on a corporate adviser’s role and responsibilities in relation to conducting due diligence on admission, legal due diligence, financial due diligence and due diligence on directors.
The closing date for comments is February 20, 2015.