Frequently asked questions
Most recent questions
How are the Exchange's markets differentiated for closed-ended investment funds?
The Main Market offers funds access the widest possible investor base from institutional to general retail investors. The rules governing admission and ongoing levels of shareholder engagement and transparency reflect this in that they are super-equivalent to EU Directive standards.
The Specialist Fund Market is a peer group market designed to appeal to alternative funds and their sophisticated investors. The rules governing corporate governance and transparency standards reflect this by replicating EU Directive minimum standards, which also qualifies the market for most investment mandates. The market is designed to accept more sophisticated fund vehicles, governance models and security types that are likely to be characteristic of the funds involved.
AIM offers a market for ‘vanilla’ funds. AIM is suitable for the more straightforward funds seeking a broad investment audience including institutional and retail investors. However, as an Exchange-regulated rather than an EU Regulated market, institutional investment exposure in the UK and Europe will be subject to thresholds within mutual fund and investor mandates.
What is the definition of 'investment entity' for the Specialist Fund Market?
It is a requirement for admission to trading on the Specialist Fund Market that funds are of the closed-ended type and submit an EU Prospectus Directive-compliant document that satisfies Annex XV building blocks (as specified in the EU Prospectus Regulation). The Specialist Fund Market is designed to offer flexibility in considering structures and security types suitable for funds operating in the alternative fund management arena, and so we do not issue a more specific definition of what constitutes an ‘investment entity’ for Specialist Fund Market purposes. However, advisers and potential issuers are encouraged to discuss particular propositions with us at an early stage to verify their suitability.
Where does my fund have to be domiciled?
UK and non-UK investment entities can seek admission to the Specialist Fund Market. There is no restriction on domicile.
Can investment entities transfer from other Exchange markets?
Yes. Investment entities may transfer to the Specialist Fund Market from AIM and the Main Market. Refer to the Guidance for Admission to Trading for more details.
Are Specialist Fund Market securities eligible for UK-REIT status?
Eligibility for UK-REIT status is dependant on compliance with a variety of factors. Following changes to the relevant legislation in 2012, SFM funds may now qualify for REIT status. For more information on REITs, click here to access our dedicated website pages.
Do securities have to settle in CREST?
To be admitted to trading on our SETS trading service, securities must be eligible for our Central Counterparty Service, operated through CRESTco and the London Clearing House. However, other Central Securities Depositaries can also be accommodated, including Euroclear, in which case securities will be admitted to our SETSqx trading service.
Can the Specialist Fund Market accept Segregated Portfolio Companies/Protected Cell Companies?
Yes. The Specialist Fund Market is designed to accept structures like this.
Can the management company behind a fund or group of funds be admitted to the Specialist Fund Market?
No. The Specialist Fund Market accepts only investment funds themselves, not the management company, structure or group behind those investment funds.
The joining process
What is the process for admission?
Applicants to the Specialist Fund Market will be required to produce a prospectus approved by their relevant EEA Competent Authority. For example, in the case of applicants whose Home Member State is the UK, this will be the Financial Conduct Authority (FCA). Applicants must then seek admission of securities to the Specialist Fund Market through the process outlined in the London Stock Exchange Admission and Disclosure Standards. Also refer to the Guidance for Admission to Trading on the Specialist Fund Market for details.
What are the initial and annual costs of admission?
Admission and annual fees for securities admitted to the Specialist Fund Market are calculated in accordance with the London Stock Exchange’s equity fee scale. Our fees calculator will allow you to calculate your admission and annual fees.
Can I ‘passport’ my prospectus into the UK for admission to SFM?
Yes. Refer to the Guidance for Admission to Trading on the Specialist Fund Market for details.
What is the regulatory status of the Specialist Fund Market?
The Specialist Fund Market is an EU regulated market as defined in the Markets in Financial Instruments Directive (MiFID) and a structure which is compliant with the EU’s Financial Services Action Plan. The Specialist Fund Market is a regulated market for the purposes of the UCITS Directive.
What are the FSAP Directives?
The Financial Services Action Plan (FSAP) is an EU initiative to improve the single market in financial services. FSAP is enacted through four EU Directives, which set harmonised standards of disclosure and transparency for securities admitted to an EU regulated market. These are the Prospectus Directive (PD), the Market Abuse Directive (MAD), the Transparency Directive (TD) and the Markets in Financial Instruments Directive (MiFID). Click here for more information on these Directives.
Can the Exchange refuse to admit securities to the Specialist Fund Market?
In certain circumstances, the Exchange reserves the right to refuse to admit, suspend or cancel admission to trading on any of our markets, including the Specialist Fund Market. Refer to the Guidance for Admission to Trading on the Specialist Fund Market for details.
Specialist Fund Market securities must be 'freely negotiable'. Is there a definition for this?
Refer to Article 35 of Chapter V of the Commision Regulation 1287/2006 of 10 August 2006 for further details. In summary, 'transferable securities shall be considered freely negotiable if they can be traded between the parties to a transaction, and subsequently transferred without restriction, and if all securities within the same class as the security in question are fungible'.
Are Specialist Fund Market securities eligible for ISAs?
Shares which are traded on any market of a recongnised stock exchange in the EEA can be included within a stocks and shares ISA. Refer to the HM Revenue and Customs guidelines by clicking here.
How can I identify Specialist Fund Market securities?
A published list of securities admitted to the Specialist Fund Market will be available on this website. Specialist Fund Market securities will also be identifiable on our trading screens through the following segment codes: SFM1, SFM2, SFM3, and SFM4.
Are there any risks associated with investing in the Specialist Fund Market?
Investment entities admitted to the Specialist Fund Market will be securities that may have characteristics such as:
variable levels of secondary market liquidity
sophisticated investment propositions with concentrated risks
highly leveraged structures
sophisticated corporate structures
and are therefore intended for institutional, highly knowledgeable investors or professionally advised investors only.
Can I use this market for a public offer of securities to less sophisticated investors?
No. The Specialist Fund Market is not intended as an admission route to a regulated market for investment entities that are intending to make a wider public offer of securities to less sophisticated investors. The Specialist Fund Market is designed purely for the needs of highly specialised investment entities seeking institutional, professional and highly knowledgeable investors. A more appropriate route for a public offer would be to seek a listing on the Main Market via following Chapter 15 of the FCA Listing Rules or admission to AIM.
Will securities be included in the FTSE UK Series of indices?
No. Only investment entities that select a listing on the Main Market through complying with Chapter 15 of the FCA’s Listing Rules can potentially be included in the FTSE UK Series of indices.