Derivatives Listing

Derivative Securities

The listing rules contain a special chapter in relation to the listing of derivative securities.  Derivative securities are those that entitle the holder to require or make delivery or receive payment in cash in respect of securities, assets, indices  or other specified variables.

The rules also apply to debt securities where the issuer has an obligation arising on  issue to pay less than 100 percent of nominal value on the scheduled maturity date in addition to which there may be an interest payment.  An issuer to which the obligation applies must appoint a listing agent.

Application for Listing

An applicant for admission for derivative securities must comply with most of the general stock exchange listing requirements. Further obligations apply.

The derivative security issuers must be a credit institution.  If it is an overseas company, it must be regulated by a regulatory authority in a state which is a member of the OECD responsible for the regulation of securities firms or futures firms and be carrying out its activities relating to derivative securities within the scope of its business.  Where the issuer is a special purpose vehicle, the arranger or lead manager must satisfy the above condition.

Alternatively, the obligations created by the issuer in relation to the derivative securities must be unconditionally and irrevocably guaranteed or benefit from equivalent arrangements by an entity in the above classes.

An issuer unable to satisfy the conditions may consult with the stock exchange and obtain specific approval where they have net assets of at least €75 million and investment grade rating of its equity or unsecured debt, by an appropriate agency.

Listing Conditions

An issuer must publish and file accounts that cover at least two years and must be in respect of a period not more than 18 months before the date of the prospectus.  They must to be an independently audited.

The issuer who is seeking listing on the stock exchange must be in compliance with the requirements of any overseas stock exchange in which it has securities listed and any competent authority or regulator. The directors of the issuer must collectively have appropriate experience and expertise in the management of its business.

Where a derivative security is to be listed, the amount must be calculated by reference to the price of a security which is traded on a regulated, regularly operating, recognized open market or by reference to prices, levels and performance of s currency, index, interest rates, commodity or combination of the above or be credit linked.

The stock exchange may dispense with this condition for other derivative securities, including those defined by reference to internationally recognized industry definitions or standards.

There are conditions applicable to retail derivatives listing.  They must not be a contingent liability investment, as defined. If a retail derivative gives its holder a right of  exercise, its terms and conditions must

• provide for cash-settled derivatives, which are in the money at the exercise time on the expiration date,
• automatic exercise of the security will apply or for physically settled derivatives that are in the money at the exercise time on the expiration date,
• if the holder fails to deliver exercise notice by its stipulated time, the issuer will irrespective of the failure to do so pay to the holder an amount in cash in lieu of the holder’s failure to deliver an exercise note, the amount and method of calculation of which is determined by the issuer.

Approval of Prospectus

The prospectus must be approved by a competent authority and published in relation to the securities which are the subject of the application for listing.  Certain documents must be furnished to the stock exchange, including a draft prospectus and a checklist setting out how the conditions have been met

The following documents must be submitted no later than the day on which approval of the prospectus is sought

• copy of the prospectus submitted for approval
• translation if applicable
• copy of the supplementary prospectus
• checklist; how  listing conditions have been satisfied
• formal notice SEDOL
• appropriate fee.

Where a listing prospectus has been approved by a competent authority other than the Irish competent authority, the following documents must be submitted to the stock exchange at least 10 business days prior to the date in which the application for listing is due to be considered

• copy of the approved prospectus with translation of applicable approved supplementary prospectus

An issuer must publish a notice stating how the prospectus or base prospectus has been made available and where it can be obtained by the public unless the securities for which the application is made are of a class already listed.

The notice must be approved by the stock exchange before issue and contain certain information identifying the issuer, type and class of securities, schedule for the admission to listing, and statement of where the prospectus can be obtained.

Listing Approval

Following submission of the relevant documents, the listing may be granted subject to the issue of the derivative securities in question.  Admission becomes effective once the stock exchange admits the securities for listing and announces the same.

The program for application for listing must cover the maximum amount of securities that may be in issue and listed at any one time in the program.  If the stock exchange proves the application, it will admit to listing all the securities which may be issued under the program within 12 months, subject to the stock exchange being advised as to the final terms of each issue, receiving any supplementary prospectus for approval, receiving confirmation that the securities have been issued and receiving the relevant listing fee.

Continuing Obligations

An issuer that only has derivatives securities listed is subject to the specific continuing obligations set out in the relevant chapter of the rules.  An issuer that has both derivative securities and other securities is subject to continuing obligations in those rules and continuing obligations in respect of other securities.

The issuer must comply with certain provisions of the market abuse and transparency rules and regulations. Where an issuer is not already required to comply with the financial reporting requirements under the transparency rules, certain substitute obligations apply.  These require publication of reports and accounts on a regular basis which are independently audited.  This does not apply

• to an issuer who is a wholly-owned subsidiary of a listed company.
• listed issues of listed security that are unconditionally and irrevocably guaranteed by the issuers listed holding company or equivalent arrangements are in place
• included in the consolidated account of its listed holding company and is not required to comply with other requirements for the preparation of annual reports.

In the case of guaranteed, other than state guaranteed securities, where the guarantor is not also listed on the stock exchange, its annual report and accounts must be submitted to the stock exchange.  The issuer must notify any adjustment or modification it makes to the listed security as a result of any change including methods of calculation of an index or other factors to which the amounts payable under the derivative are referenced including details of the underlying event that necessitated the adjustment or modification.

An issuer must inform the stock exchange immediately if it becomes aware that an underlying investment that is listed or traded outside Ireland has become suspended.