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U.S. Securities Update: Reg S, Cat 3 Securities - One Year On
 
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Electronic Settlement for US Regulation S, Category 3 Securities
Trading on the London Stock Exchange

 
Financial Times Innovative Lawyers 2016 Awards and
Statistics - One Year On

We are delighted that the Forum was “Highly Commended” at the Financial Times Innovative Lawyers 2016 Awards this month (5 October 2016) for project-managing the London Stock Exchange’s roll-out of electronic settlement for US Regulation S, Category 3 equity securities (“Regulation S, Category 3 Securities”) in accordance with EU regulations and in compliance with US securities law.

Furthermore, the Forum held a Practising Law Institute (“PLI”) briefing last month (27 September 2016) co-hosted with Umerah Akram (Head of Elite, UK at the London Stock Exchange) to discuss the electronic settlement of Regulation S, Category 3 Securities one year on. Key statistics, as discussed on this PLI briefing call, included:
  • there are currently ten lines of Regulation S, Category 3 Securities using the electronic system on AIM and two of these lines have joined since implementation in September 2015 (there are 49 U.S. companies listed on AIM but most of these are not currently within their distribution compliance period under Regulation S); and
  • analysis on the eight Regulation S, Category 3 Securities that were on AIM prior to electronic settlement implementation shows that in the twelve months since implementation (compared to the twelve months prior):           
  1. on average, the number of trades increased by over 75% and the number of shares traded was also up by over 400%; and
  2.  in aggregate, the number of trades for these Regulation S, Category 3 Securities doubled.
As detailed in the Forum’s Practical Law publication, it was anticipated that the electronic settlement procedures would result in increased liquidity for current issuers - these statistics seem to bear out this prediction.      

For more background on the electronic settlement project, please click here.
 
The Forum’s Practical Law (September 2015) publication entitled “The Electronic Settlement of US Regulation S, Category 3 Securities Trading on the London Stock Exchange” is accessible to all Practical Law members here.

If you have any further questions regarding this please feel free to contact us.

Best regards,
Daniel Winterfeldt
DWinterfeldt@reedsmith.com 
Partner, International Capital Markets & US Securities
Reed Smith LLP
Founder and Co-Chair of the Forum

 
Edward Bibko
Edward.Bibko@bakermckenzie.com 
Head of Capital Markets for EMEA
Baker & McKenzie LLP
Co-Chair of the Forum
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