Overview

This Financial markets alert from SJ Berwin deals with next steps, key features and possible outcomes of the Office of Fair Trading's proposed investigation into the equity underwriting market, scheduled to start this summer.

It covers the following key points:

• The OFT has announced its intention to launch an investigation into equity underwriting and associated services later this summer. The investigation will relate to how equity underwriting and associated services are procured, provided, charged and paid for.

• The OFT is inviting comments on the scope of the investigation (e.g. whether it should include equity raising by AIM-listed companies and IPO-related issues) by 9 July.

• There is a broad range of possible outcomes, with everything from a clean bill of health to a reference to the Competitio Commission for a two year market investigation (and the possibly wide ranging remedies that could follow such a market investigation, including price control, codes of conduct/ombudsman or further regulation).

• Key steps for companies likely to be affected by the market study include: (i) responding to the invitation to comment and seeking a subsequent meeting with the OFT to understand its concerns and to help shape the investigation, (ii) providing the other side of the story to the OFT (as, so far, it has only heard from users of equity underwriting services and (iii) putting a team in place (with external advisers as appropriate) to deal with the OFT's inevitable information requests which will be formulated once the initial comment stage is finished.

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