Daily Management Review

Global Markets Regulators Are Keeping Close Watch On SPACs


Global Markets Regulators Are Keeping Close Watch On SPACs
Special purpose acquisition companies, or SPACs, are being monitored by global securities markets regulators because of possible concerns over regulatory issues, according to securities markets regulators.
SPACs are shell companies that get themselves listed on the stock market and use the proceeds to buy other companies.
This form of investment as well as a means to go public for private companies gained significant traction last year on Wall Street while gaining popularity in the European market as a listing vehicle this year. According to reports, this is now spreading into the emerging markets of the world.
"While SPACs may offer alternative sources of funding and provide opportunities for investors, they may also raise regulatory concerns," the International Organization of Securities Commissions (IOSCO) said in a statement.
The newly formed SPAC network of the IOSCO met for the first time on Monday to exchange information on the issue, said the global body which comprises of the United States Securities & Exchange Commission (SEC), the Financial Conduct Authority in Britain and regulators in the European Union, Asia, Latin America and Africa.
"I am pleased that so many members of IOSCO have joined the SPACs network to exchange experiences on non-traditional IPOs via SPACs and discuss emerging issues related to investor protection and fair, orderly and efficient markets," said Jean-Paul Servais, chairman of Belgium's markets watchdog and Vice-Chair of IOSCO's board.
The members of the IOSCO are also market regulators within their own countries and jurisdictions and therefore have the power of taking actions to protect the interests of investors within their area of legal influence.