Industry groups push to digitise equity capital raising as first fully electronic IPO draws closer
Industry groups push to digitise equity capital raising as first fully electronic IPO draws closer #
The FIX Trading Community, the Investment Association (IA) and the Association for Financial Markets in Europe (AFME) have jointly announced a cross-industry initiative to create electronic communication standards for equity capital raising, with the aim of enabling fully digital IPOs and secondary share placements.
The three organisations have established the Equity Issuance Working Group (EIWG) to develop industry-wide standards for processes such as bookbuilding and share allocations. The group will examine how to apply the Financial Information eXchange (FIX) protocol, the de facto standard for pre-trade and trade communication in global equity markets, to fully digitalised workflows across the equity capital raising lifecycle, according to the IA.
The EIWG will be co-chaired by Daniel Riches, Head of Equity Dealing at M&G Investments, with a sell-side co-chair to be named. The IA and AFME have also said they will work to establish best practice for publishing unique identifiers before a transaction opens for orders, a step intended to add transparency and structure to the deal process from the outset.
Jim Kaye, Executive Director of the FIX Trading Community, described equity issuance as an area “ripe for electronification,” citing the body’s track record of building automation standards across other parts of the trading stack. “Our history of designing standards to automate trading shows what’s possible and we believe automation of the IPO process is achievable when you have the right people behind it,” he said, as quoted by Markets Media.
The initiative follows calls from the buy-side community for a more streamlined primary markets process. The IA had previously issued a position paper on IPO automation, arguing that electronic order placement could improve auditability, reduce risk and enable time-stamped, compliance-checked workflows currently handled manually. Moving to a fully electronic model would also allow orders to be placed outside standard market hours, the industry groups said.
FIX, which has spent more than three decades helping pioneer electronification in equity trading, has an established standards infrastructure and has already begun work on automating IPO and accelerated bookbuild (ABB) workflows as part of a broader digitisation agenda for primary markets.
No timeline for completing the framework has been announced. The formation of a named working group with cross-sector membership indicates the initiative has moved beyond discussion to active development.
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