On 2 May 2017, the FICC Markets Standards Board (FMSB) published its latest Standard – the New Issue Process standard for the Fixed Income markets. The Standard was developed by a group of senior practitioners drawn from market participants (including banks, corporate issuers and institutional investors) active in the international wholesale FICC Markets. A Transparency Draft was published last November, with the now final version taking into account feedback from market participants.

The standard sets out a range of changes to the new issue process in the European market, from the granting of a mandate to publication of statistics. As per the FMSB press release, the main proposals in the standard are that:

• Lead banks should make their allocation policies, or a summary, available to issuers and all market participants.
• The issuer’s preferences should be taken in account when deciding the allocation policy for a specific/individual deal.
• When a mandate is granted, the lead banks and issuer should discuss, understand and agree the issuer’s objectives for the transaction and how the banks will achieve them, including such considerations as allocation preferences and marketing strategy for the deal.
• Lead banks should disclose publicly to all market participants their general policy, or a summary, for how they select investors for market soundings and roadshows. The policy for a specific deal should take account of any issuer preferences.
• Lead banks should agree a strategy on book disclosure frequency with the issuer. Book updates should be disclosed publicly and should not be misleading.
• Investors need time to collate their demand for a transaction. It is best practice to make no significant changes to indicative issue terms, or to publicise the order book size, during the last 15 minutes of the bookbuild.
• Investors should only submit clear orders which are a true reflection of their demand.

FMSB members are expected to comply with final standards on a global basis. Standards are also shared with non-member firms, who are encouraged to adopt them; it is anticipated that the standard will be adopted by primary markets participants in other jurisdictions over time. If members have any questions, please contact Adam Jacobs-Dean or Adele Rentsch.