The week in investor relations: Mifid II rule changes mooted, Abrdn rebranding and cheese futures
– The UK’s Financial Conduct Authority (FCA) is considering scrapping Mifid II research rules for companies with a market cap of less than £200 mn ($278 mn), reported Investment Week. The move is being mooted as part of a package of proposals designed to ‘reduce the burden’ on smaller investment firms and improve the competitiveness of UK financial services. The FCA said in a consultation paper this week that it intended to amend rules ‘that are not achieving their objectives in an efficient way’, as it works with HM Treasury on capital markets reform. Following the UK’s exit from the European Union, large volumes of European regulation, including Mifid II, were ‘onshored’ into the country’s own regulatory regime.
– Standard Life Aberdeen, ‘a grand fund manager at the heart of the financial establishment, took against the letter e,’ reported the Evening Standard, in a multi-million pound shake-up that sees it renamed Abrdn. The paper reported that chief executive Stephen Bird said the new name will be part of a ‘modern, agile, digitally enabled brand’, though it was widely mocked on social media. The Herald, however, added that ‘the financial giant could certainly not be accused of delivering a rebranding [that] lacked impact.’
– Traders in US cheese futures now hold contracts worth 29 mn kilograms of block cheddar, reported the Financial Times (paywall). This is a sharp increase from the start of the year, ‘with companies racing to lock in supplies’ in anticipation of accelerating demand as the American economy reopens from coronavirus lockdowns. The paper noted that outstanding volumes in the Chicago Mercantile Exchange’s block cheese futures market had soared to 3,200 contracts, up from 469 at the start of this year and the highest level since the futures were launched in January 2020. ‘The jolt of trading activity in late March and earlier this month, which pushed up futures positions, came after a stronger than expected recovery in US restaurant sales as well as expectations of continued robust demand from households ahead of the American grilling season,’ wrote the FT.
– The SEC delayed its decision on approving the VanEck Bitcoin ETF until June as the regulator’s new chief began reviewing high-profile asset applications, reported CNBC. The SEC typically takes 45 days from when an application is filed to render a decision on whether such a security should be allowed to trade. The 45-day window for the VanEck Bitcoin ETF ends on May 3, but the SEC has extended the deadline. While bitcoin ETFs exist in the US, CNBC explained that they do not directly own the cryptocurrency – they own portfolios of stocks deemed to have exposure to blockchain technology. Some bitcoin watchers believe 2021 could be the year a bitcoin ETF is approved thanks to the Senate’s confirmation of Gary Gensler to lead Wall Street’s top regulator.
– The Wall Street Journal (paywall) reported that some of the companies that are once again hosting virtual AGMs this year hope to improve the experience for investors, many of whom felt muted last year after the sudden shift to remote technology. This year 346 companies – 86 percent of a total of 403 in the S&P 500 that filed their proxy statement up to April 22 – said they would hold their AGM remotely as large physical gatherings remain restricted, according to MyLogIQ. Some companies are working to increase interaction with their shareholders, from allowing investors to ask live questions and interact with management to allocating more time for questions and incorporating new videoconferencing tools.
– Reuters reported that, according to people familiar with the matter, the SEC is considering new guidance to curb growth projections made by listed blank-check companies and clarify when they qualify for certain legal protections. The measures being weighed by officials at the agency would escalate its crackdown on the flood of deals in special purpose acquisition companies (Spacs), which it worries is putting investors at risk. The Spac market had already started to lose steam after the SEC earlier this month suggested warrants issued by Spacs should be accounted for as liabilities rather than equity instruments.
– It was IPO success for London as shares in Darktrace surged after the British cyber-security firm made its debut on the London Stock Exchange, reported The Guardian. The Cambridge-based company began conditional trading on Friday at 250p a share, with ‘enthusiastic investors immediately pushing up its stock’ by 40 percent to 350p a share, and sending its market value up from £1.7 bn to almost £2.4 bn. The 250p float price was at a lower level than originally intended, in part to avoid a repeat of Deliveroo’s opening-day flop last month, the paper said.
– Hainan Airlines reported the biggest-ever loss for a Chinese listed company, according to South China Morning Post. The Haikou-based carrier reported a loss of $9.9 bn for 2020, having been hard hit by the Covid-19 pandemic and restructuring at ‘debt-laden’ parent company HNA Group. Revenue dropped 59 percent on the previous year and SCMP said the airline has lost 75 percent of its market value from a record high in 2015. The record for annual losses was previously held by Qinghai Salt Lake Industry.