The World Federation of Exchanges Identifies Policy Levers to Encourage SME Listings
The World Federation of Exchanges (WFE), the global industry group for exchanges and CCPs, today published a report on how the flexibilities for listed issuers, introduced as a result of the pandemic, could be used to stimulate SME listing in the future.
Drawing upon the initial findings of a WFE member survey on covid-related issuer flexibilities, today’s paper studies how exchanges worked closely with wider stakeholders -- including regulators, governmental departments, and institutional investors -- to help companies deal with the challenges of the pandemic. The paper acts as a stock take of the measures that were introduced but also considers whether some of these relaxations are fit for purpose as we ‘build back better’ following the pandemic. In particular, the paper notes:
Capital raising measures, including relaxed pre-emption rights for shareholders, enabled companies to raise emergency funding and remain fully solvent.
Authorities granted temporary extensions for filing of annual disclosures;
Virtual and hybrid Annual General Meetings enabled shareholders to effectively engage with company management, without having to be present in person;
Online investor roadshows enabled savings in terms of management time and costs, compared with traditional roadshows;
Alternative audit procedures were employed by the international audit community, to provide a ‘reasonable level of assurance’ over corporate reporting;
A number of WFE members produced guidance for issuers and investors to promote awareness of ways to deal with the novel challenges of the pandemic; and
Effectively implementing these relaxations required close working with key stakeholders.
Nandini Sukumar, Chief Executive Officer, the WFE said: “As we continue to recover from the pandemic, it is critical that we understand and learn from the role that the exchange community has played in guiding issuers through the challenges they experienced. While markets varied in their individual responses, this paper is a welcome contribution in highlighting measures that were successfully implemented and more importantly, those that can be used to encourage SME listing”.
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About the World Federation of Exchanges (WFE):
Established in 1961, the WFE is the global industry association for exchanges and clearing houses. Headquartered in London, it represents over 250 market infrastructure providers, including standalone CCPs that are not part of exchange groups. Of our members, 35% are in Asia-Pacific, 45% in EMEA and 20% in the Americas. WFE’s 57 member CCPs collectively ensure that risk takers post some $1 trillion (equivalent) of resources to back their positions, in the form of initial margin and default fund requirements. WFE exchanges are home to 47,919 listed companies, and the market capitalisation of these entities is over $109 trillion; around $137 trillion (EOB) in trading annually passes through WFE members (at end 2020).
The WFE is the definitive source for exchange-traded statistics and publishes over 350 market data indicators. Its free statistics database stretches back more than 40 years and provides information and insight into developments on global exchanges. The WFE works with standard-setters, policy makers, regulators and government organisations around the world to support and promote the development of fair, transparent, stable and efficient markets. The WFE shares regulatory authorities’ goals of ensuring the safety and soundness of the global financial system.
With extensive experience of developing and enforcing high standards of conduct, the WFE and its members support an orderly, secure, fair and transparent environment for investors; for companies that raise capital; and for all who deal with financial risk. We seek outcomes that maximise the common good, consumer confidence and economic growth. And we engage with policy makers and regulators in an open, collaborative way, reflecting the central, public role that exchanges and CCPs play in a globally integrated financial system.