High yield issuers dodge EU market abuse rules

Author: Lizzie Meager | Published: 11 Aug 2016

A British company’s decision to list its first high yield (HY) debt on the Channel Islands Security Exchange to avoid the EU’s new Market Abuse Regulation (MAR) has got the market wondering about new opportunities for forum shopping.

MAR, which came into effect on July 3 while most of Europe was preoccupied with Brexit, introduces new disclosure requirements for companies with listed securities, including keeping internal disclosure lists and a prohibition on the use of password-protected websites.

Is high yield migration ahead?
Michael Dakin, co-vice chair of the Association for Financial Markets in Europe’s high yield division and partner at Clifford Chance in London, thinks it’s likely others will follow.

“MAR cuts across the contractual relationship between parties that’s long existed in HY,” he said. “So it’s unclear whether this additional burdensome regime is really necessary or appropriate.”

And central bank policy – quantitative...