ShareSoc and UKSA make joint response to FCA/FRC Consultation on Effective Stewardship

In January 2019, the FCA and FRC issued a joint discussion paper DP19/1 Building a regulatory framework for effective stewardship.

On 15 April 2019, we made a joint response from UKSA and ShareSoc on behalf of individual investors. In our response we make the following key points:

Investor stewardship must not let boards off the hook for their own stewardship. The Stewardship Code should be renamed the Investor Stewardship Code to better reflect what investors do and to better acknowledge the role of management and Boards in the stewardship of their shareholders’ capital.
The role of individual investors in engaging with companies and stewardship should be given more weight in the FCA/FRC considerations. There are reasons why individuals are particularly good stewards (they have a long-term focus, their own money is at risk, among other things).
We do not agree that retail shareholders rights should be outside the scope of this consultation. Retail investors own, on average, 29% of AIM companies and 12% of main market companies. They are a non-trivial constituent to the stewardship issue. At present only 6% of retail shareholders’ shares are voted at AGMs. The terms and conditions of legal agreements between retail investors and platforms mean that the rights to vote shares are held by the nominee. Platforms are therefore entitled to vote retail shareholders’ shares (to be specific, interests in shares). To date, we know of no platform nominee who has chosen to exercise this right, but this issue and platforms terms and conditions need to be reviewed. We very much welcome the reference to The Law Commission Review of Intermediated Securities(in para 4.13 on page 17 of the FCA/FRC DP19/1). The Law Commission Review must be given a much higher priority, so that retail investors can exercise their role as stewards of the companies in which they invest.
Investor Engagement and Stewardship should not be looked at in isolation from fund performance and fund fees. The proposed requirements for fund managers to report annually to asset owners should be enhanced by performance data and tracking error statistics. It is important that these high-level reports contain information that will highlight closet indexing. (see our answer to question 3 of CP19/7).
Fund managers can be particularly bad stewards– i.e. quite the wrong people to be voting shares. Reasons include Index-following, short-termism, free-riding, need not to upset.

Our full response is here FCA_FRC DP19_1 Stewardship Discussion Paper – Building a regulatory framework for effective Stewardship on Code the UK Shareholders’ Association ShareSoc Response – FINAL 13 April 2019

The FCA/FRC consultation paper can be downloaded here https://www.fca.org.uk/publications/discussion-papers/dp19-1-building-a-regulatory-framework-effective-stewardship

This is one of three consultations. The FRC has issued a consultation units Draft Stewardship Code and the FRC issued a technical consultation on how to implement the EU Shareholder Rights Directive II in relation to its Stewardship aspects. Our responses are here FRC-Stewardship-Code-2019-Revisions-Consultation-response-Final2 and here FCA CP19_7 Proposals to Improve Shareholder Engagement UKSA-ShareSoc response V3

Post Date: April 16, 2019

Group description:	Following the launch of the SIGnet Technical Traders groups, it was identified that there were a number of members who use fundamental and other information as their main source of choosing companies to invest in, who would find some understanding of technical analysis helpful to identify good entry and exit points for their investments. This new SIGnet Technical Analysis in Support of Investing group is therefore being launched and we welcome members of all levels of experience to join.
Meeting Type/Venue:	Online via Zoom
Meeting Frequency/Timing:	There will be an initial Zoom meeting on Monday 29th April at 7pm to launch this group, please email info@sharesoc.org if you are interested in joining.

Group description:	All levels of experience welcome. A typical meeting agenda includes: – Macro Environment – Trades: Members review existing positions and identify securities with promising TA entry patterns or setups and with suitable risk/reward. Any security, long, short, futures, options may be considered. The convener takes actual positions in trades and maintains his own detailed ledger, accurately measuring performance of individual securities and cumulative activity. Members are notified by e-mail prior to the entries or exits that are decided upon. Following each meeting an updated copy of the ledger is circulated together with the next meeting agenda. Members may wish to maintain similar ledgers of their own but there is no obligation to do so. – Technical Analysis: Techniques and systems used in trades. Members can request discussion of particular aspects of TA.
Meeting Type/Venue:	Online via Zoom
Meeting Frequency/Timing:	The first Tuesday of every month from 7 to 9pm

Group description:	Despite most members of this group being experienced investors, all levels of experience are welcome. Meetings take place at different locations in the West Sussex area.
Meeting Type/Venue:	In person with some Zoom meetings.
Meeting Frequency/Timing:	Face to face meetings are generally held on the second Monday in every month, during the day between 12 noon and 4pm. Zoom meetings are also held from time to time but these are shorter in length (max. 2 hours) and generally in the evening.

Group description:	A new in person group coming soon! Keep and eye on our Events page to register for the launch meeting.
Meeting Type/Venue:	In person
Meeting Frequency/Timing:	TBC

Group description:	Open to all investors / people with an interest in investing. Typical meeting will involve members talking about recent purchases, successes, failures and possible future purchases. Also with occasional visiting speakers or members making presentations on a topic of interest.
Meeting Type/Venue:	We aim to meet on the last Tuesday of each month in a private room at a pub in Playhatch. Start time 7pm with members encouraged to meet up around 6pm for a bite to eat / drink before hand, if their diaries allow.
Meeting Frequency/Timing:	7pm on the last Tuesday of the month. Meetings likely to last about two hours but with informal ‘overspill’ before / after.

Group description:	Group of investors that meets on a bi-monthly basis to discuss all things happening in the world of investing, share each other’s knowledge and give the benefit of each other’s experience. Group primarily focuses on unit trusts, open ended investment companies and investment trusts. However, all investments are up for discussion and new members are always welcome and encouraged.
Meeting Type/Venue:	Remotely via Zoom on Saturdays on a bi-monthly basis, on dates collectively agreed by all group members.
Meeting Frequency/Timing:	Bi-monthly.

Group description:	Our group members have wide ranging investment experience and work backgrounds. Discussion topics include reviewing our recent stock or collective investment buying and selling activity, plus what we are considering buying or selling and the reasons for our decisions. We also have a wider discussion on where we think opportunities might arise in the next few months and what we think needs to be avoided. Members occasionally lead discussions on specific topics such as recent events attended, articles or books of interest and sources of investment ideas and information.
Meeting Type/Venue:	During the pandemic our meetings were held on Zoom, but we have now resumed meeting in person at a location a few miles to the west of Colchester. Most meetings will now be in person, but it is possible that occasional meetings will be held on Zoom in special circumstances.
Meeting Frequency/Timing:	We meet midweek every two months. Zoom meetings run for about two hours from 10.30am and in person meetings from 11am until about 3pm, including a break for lunch.

Group description:	Our group is a broad church that contains investors of varying age and experience. We discuss stocks and investment trusts that we have bought, sold or are interested in and the reasons behind our decisions, and try to make sense of the ever changing investment environment. Our members backgrounds are diverse and include corporate banking, engineering, teaching and the leisure industry. Discussions are robust and challenging but tend to be to be informal, and do not generally involve agendas, presentations or detailed preparation. We are a friendly and approachable group who welcome investors of all levels – we just ask that you contribute, at whatever level you can.
Meeting Type/Venue:	Our meetings are held in a very nice pub near to South Ealing tube station (Piccadilly Line), not far from Ealing Broadway (District, Central and Elizabeth Line). Group numbers permitting (and assuming members are happy to purchase food and drink from the bar), we may also have access to a private room in the pub.
Meeting Frequency/Timing:	We meet every 2 months, usually on a Wednesday morning at 11am.

Group description:	An online group for those who are new to investing. Including topics such as how to buy and sell shares, unit trusts, investment trusts, exchange traded funds and diversification, tax and how to save it, pensions, portfolio management and research tools, other asset classes and basic technical analysis.
Meeting Type/Venue:	Online using Zoom.
Meeting Frequency/Timing:	Meetings are usually held on the 1st Monday of the month at 7:15pm.

ShareSoc and UKSA make joint response to FCA/FRC Consultation on Effective Stewardship

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