FMSB proposes greater transparency in new issue process for debt

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Banks should be more transparent about their allocation policies and investors should make sure their orders are a true representation of their demand, according to a proposed new standard on corporate and other debt issues from the FICC Markets Standards Board (FMSB).

The New Issue Process Standard for the Fixed Income Markets sets out a range of improvements to the new issue process in the European market, from the granting of a mandate to publication of statistics.
The standard, which is being published as a transparency draft for comment, builds on the ICMA code for investment grade debt but would apply to all widely syndicated offerings of credit products in the wholesale markets, including investment grade, high yield, securitisation and emerging market debt.
The standard is the third to be published by the FMSB, following earlier standards on Reference Price Transactions and Binary Options in the commodities markets.
Mark Yallop (pictured), chair of the FMSB, says: “This standard is the result of a unique joint effort by corporate users of the market, institutional investors and underwriting banks to bring greater clarity to the process for issuing debt and to ensure it works fairly and effectively for all concerned. We believe it is a significant step in raising standards.” 
Robert Rooney, chief executive of Morgan Stanley International and chair of the FMSB’s Fixed Income, Spread Products sub-committee, says: “These proposals are aimed at the wholesale fixed income markets in Europe but over time we think market pressures will lead to this standard being adopted more broadly internationally. This is what good practice looks like whatever part of the world you are in.”
Russell O’Brien, group treasurer, Royal Dutch Shell and FMSB board member, says: “Corporates issuing debt in the fixed income markets will welcome having greater clarity and transparency in the process. We would like to see all our syndicate banks and investors adopting this standard.”
The new standard is applicable to all the main participants in the wholesale fixed income markets in the Europe, including issuers, investors and underwriting banks. Although initially the standard will be adopted by FMSB members in respect of issues in the European markets, the expectation is that primary markets participants in other jurisdictions will adopt the standard over time.

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