Explainer-in-brief: Inside the debate over retail investors
Retail investors have historically been excluded from accessing IPOs and investing in public floats. Critics of retail investors say they lack the knowledge, security and funds of institutional investors pose a threat to the stability of financial markets.
There are fears inexperienced individual investors might start panic selling at the slightest hint of a dip, causing a domino effect.
Some claim giving them access to high-stake IPOs might mean the process becomes a kind of gambling.
In the UK, the Lord Hill’s review has recently looked at reforms for the prospectus regime.
The Treasury has decided to relax the rules to allow retail investors to access equity in listed companies like institutional investors, but to delegate more power to the FCA.
The financial watchdog will have increased responsibility for designing and implementing the regulatory requirements for accessing IPOs.