Tweet

Nothing Standard About This New Category

Guest post by: Ash Mehta

Article Overview: A confusing name for decaffeinated regulation. So goodbye Cadbury, and now that we've all digested the threat of job cuts and the loss of independence of a great British brand, we can turn our attention to the real concern of Curly Wurly et al being renamed. Some of us of a certain age of course still rue the rebranding of Opal Fruits and fear that long-loved Cadbury brands will have their names changed to something that begs an exclamation mark after them like Starburst(!).

Nothing Standard About This New Category

To add to the naming confusion many chocolate bars have been shrinking in size. Only last June the Mars Company admitted that costs were a factor in reducing the size of a Mars bar from 62.5g to 58g. Being public spirited though, the Mars Company had previously launched a product called Mars Duo which, weighing in at 85g, was, despite its name, anything but twice the size of a regular Mars bar; before or after the reduction in size.

FMCGs

Confused? Well that's the idea. In the fast moving world of Fast Moving Consumer Goods (FMCG) this is all part of the game and in the absence of a compare the market type website for chocolate bars (which I suspect wouldn't be financially viable for very long) the poor consumer has to fathom it all out alone. Companies, whether mobile phone providers, airlines or food companies, desperately try to make comparisons difficult for consumers, to ensure that clarity doesn t prevail and lead to rational buying decisions and therefore price erosion. Obviously, this isn't necessarily bad for shareholders as long as it is sustainable.

In coffee shops, I'm sure I'm not the only one who asks for a Regular latte and is puzzled at being handed a small bucket of the brown liquid. Why is everyone trying to confuse us with inappropriate names? Why when we ask for something Regular is it not what most people would consider to be Regular . Why is a Grande the size of a small urn? Still, that's FMCG companies and retailers for you. It wouldn't happen in a professional business-to-business environment, would it?

Would It?

Last September, the FSA issued a consultation document (CP09/24 for the more eager amongst you) which proposes that from April 2010 the current Primary and Secondary listing segments be renamed to Premium and Standard. Simple enough but like a Regular latte the name doesn't reflect the product. Here are some implications of the proposed changes:

At the moment, companies with Primary listings need a sponsor and a three year track record. This is expected to be the same for the new Premium listing

Overseas companies which fall under the definition of Premium listed will need to have strong corporate governance and comply with the UK Combined Code. Something overseas companies can currently avoid with a Secondary listing.

Under the present system, Secondary listings are only available to overseas companies which have their primary listing on another exchange. However, Standard listings will also be available to UK companies.

Companies on the Standard list will not be required to have a sponsor (like Primary listing) or nominated adviser (like AIM companies). Also, Standard listing doesn't require a three year trading record (unlike Primary listing, but the same as AIM).

The good news from all of this is that the Standard listing regime should make it easier for the Stock Exchange to compete with other European exchanges having less stringent listing requirements, with which this new category has been harmonised, and thus keep London an attractive place for companies to list, but at what price?

On the face of it the new Standard category might appear to be a bridge between AIM and Primary listings, requiring as its name implies standard obligations from its companies.

Well not quite. It may be that some companies currently with a primary listing choose to downgrade to a Standard listing and relieve themselves of the governance burden. That will mean however that they are not included in any FTSE indices; a problem, as many institutions cannot invest in companies not included in an index.

Many Questions

But could AIM-quoted companies choose to move up to the main list but with a Standard listing? Or could companies coming to IPO choose Standard over AIM because of the lighter touch regulation. Might it also be that nomads of less scrupulous AIM-quoted companies seek to push them towards Standard listings so that the nomad

removes the risk from themselves? What will this mean for AIM which hitherto has been the market of choice for fast growing smaller companies? Will less scrupulous advisers who can t achieve nomad status focus solely on bringing poorer quality companies onto the Standard category? Will companies exploit the status of being on the Main Market despite it having a regulatory requirement lower than companies on AIM?

Lots of questions which, like the renaming of Cadbury's chocolate bars, we will only know the answer to in time. However, if the average consumer doesn't register that a Mars Duo is not the size of two Mars bars they are unlikely to ask, when their broker recommends a share, which market it is on and what the corporate governance standards are in the company.

Private investors seem to be aware that as a general rule investing in AIM stocks is higher risk than investing in Main Market stocks, but this new Standard category will include blue-chip overseas companies as well as start-up UK businesses with no professional sponsor or adviser. How is a private investor supposed to distinguish the risk and what devious opportunities does this present for the sharper end of private client brokers?

Over the last month or two I've spoken to many advisers, some of the best brains in the City, and a few infact with two brains. Most are still unclear as to what this all means for them and their clients and if they don't know then we, private investors, probably ought to be worried.

Decaffeinated Regulation

To torture the coffee theme, whilst this change looks like regulation, smells a bit like regulation and may temporarily taste like regulation there is a danger that it is decaffeinated regulation and that as a result with this change, like with decaffeinated coffee, we won't get the same kick and sharpness. Indeed the

regulation may even turn out to be effective de-regulation - so not coffee at all.

We're going through a period in which there is great concern over standards of governance following the corporate calamities of HBOS etc., and wariness amongst private investors and a general distrust of the City. My fear is that with the decaffeinated regulation of the Standard category the City will sleep through another phase of not just confusion but also future peril for investors, the stock exchange and the FSA, with investors not really knowing the risk of what they're investing in.

Judging by what we've lived through over the last eighteen months many people might indeed consider that to be Standard. As for me, it'll raise my stress levels and have me reaching for my Curly Wurly or whatever it's called now.

Founded in 2006, Orchard Growth Partners provides part-time finance director services. Orchard's high calibre and commercial Principals across the UK work closely with CEOs, entrepreneurs and management teams in companies to assist them in managing the growth of their businesses. Orchard's clients obtain a strategic finance director working as part of their management team without the full time cost of an FD, enabling tomorrow's capability today.

Related Articles
  How to Prioritize
  What do People Buy In A Recession?
  The Law of the Category
  When those old guys say stuff, you should listen!
  Employment Franchises Show Continued Growth
  How to Become the #1 Author in an Internet Article Marketing Category in 7 Steps
  SEO - How To Write A Profitable Yahoo Directory Listing
  Freebie Marketing Case Study - Standard Oil In China
  Adding Value to your Corporate Christmas Gift
  "The Future . . ." is 'Sole' Sista Tosin Dekalu, Lawyer Turned Shoe Cobbler
  No Matter the Economy, Some Franchise Categories Continue to Grow
  Numbers Show Employment Franchises Won't Slow Down
  Height Weight Chart - Gauging Your Life Insurance Risk Factors
  Factors to Consider Before Choosing a Franchise
  Money and Security -- Want to be a Millionaire?
  Automate your link building process for successful SEO
  From the Publisher: Kids & Pets
  Homebased and Mobile Franchise Keeps StartUp Costs Low
  The best way to Make Your Own Decals and CD Jackets
  Home Based Business; The Power of Niche Marketing

Article Tags: AIM, businesstobusiness, Cadbury, FMCGs, FSA, FTSE, IPO, Primary listings, private investors, Secondary listings, Stck Exchange



Related Forum Posts
Re: Broken delivery guarantees - Well just as an update, the package finally arrived on September 4th, which means the FedEx "Overnight Standard Delivery" turned out to take 4 days! I decided to just keep the order since it caused so much trouble. Moreover, I don't want to have to deal with FedEx again to return the parcel back to the vendor.
Re: Hot Stock Tip! - Well, I found out why Freddie Mac and Fannie Mae stock is tanking. According to Bloomberg.com: [quote:2ui2en3y]Standard & Poor's may downgrade the subordinated bonds of Fannie Mae and Freddie Mac, surprising investors who had anticipated the securities would be supported by any Treasury rescue plan. [/quote:2ui2en3y] So you see, I [i:2ui2en3y]was [/i:2ui2en3y]right to buy Freddie Mac stock... (I'd certainly anticipated that the bill would not let silly loopholes exist to continue threaten the two organizations) the only problem is that some dumb politician didn't put in the right phraseology in the bill, so now people are bailing again...
Re: What or Who Sparks Your Business Interest - It's interesting to see what the different motivations are by Age Category. I've noticed this around me: 20 to 29yr olds: Motivator: Money 30 to 39yr olds: Motivator: Success/Ambition 40 to 49yr olds: Motivator: Family comes first 50 to 59yr olds: Motivator: Leaving a legacy i've only gone that far in my analysis. Of course this is a braid generalization but I find that it helps direct my marketing to individuals in different age brackets. The product/service can be the same but the Marketing message (Benefit Statement) to a 20 year will revolve around "Money" vs. a 30-something would be on their "Self Image"
Broken delivery guarantees - Hi Everyone, I recently had a bad online purchasing experience due delivery problems. A tennis retailer I ordered from had used FedEx's Standard Overnight shipping to try and deliver my package to my friend's place in NY on Friday, August 29th. However, since my friend was at work and the condo doorman was perhaps on a break, FedEx brought it back to their depot. Keep in mind that I was only in NY for the long weekend, so I wouldn't even be able to get my order when they try to make a 2nd delivery attempt. So what's the point of calling it "Overnight delivery" when I didn't end up getting my package the next day? Most residential addresses won't have anyone at home to accept parcels because everyone is at work, so why even bother trying to deliver something during the day if you can't leave it there? And get this, FedEx then tries to deliver the goods again on Tues, Sept 2nd but reports it's the "incorrect address" and there's no such place. But then how come they found condo on Aug 29th? My order was just shipping in their depot on Sept 3rd and according to their online tracking, it's supposed to be delivered sometime today on Sept 4th. We'll see. FedEx's Overnight shipping has turned into 3+ days shipping. What would you do? I was so infuriated that I wanted to just cancel the order and ask FedEx to return it back to the retailer. I've never had any of these sort of problems with UPS.


Share this article with your friends. Fund someone's dream.

Leave a comment below or share on the left and you'll help support entrepreneurs in Africa through our partnership with Kiva. Over $50,000 raised and counting - Please keep sharing! Learn more.

Newsletter

Get advice & tips from famous business
owners, new articles by entrepreneur
experts, my latest website updates, &
special sneak peaks at what's to come!

Name:
Email:

Popular Articles

Are You An Accidental Consultant?

How to Find a Niche and Make Money Online

The Right Job - Part Five 'Compensation'

Suggestions

Email us your ideas on how to make our
website more valuable! Thank you Sharon
from Toronto Salsa Lessons / Classes for
your suggestions to make the newsletter
look like the website and profile younger
entrepreneurs like Jennifer Lopez.