The Financial Conduct Authority (FCA) has set out plans to slash “red tape” around the corporate bond market today in a bid to open up the asset class to retail investors and wealth managers.

In consultation plans shared with City AM, the watchdog said it would look to coax more listed companies into issuing debt in smaller chunks and encourage new investors into a market that has traditionally been the preserve of professional City firms.

Under the plans, a single standard for corporate bond prospectuses will be introduced that covers both large bond sizes and those under £100,000, in order to “reduce costs and barriers for companies raising capital”.

“We’re opening the door for corporates to issue bonds in small sizes so that a wider range of investors can invest in them,” said Simon Walls, interim executive director of markets at the FCA.

“That’s more funding for companies, more easily, and more choice for investors too.”

The move comes amid mounting pressure from City firms to enhance retail access to both the equity and bond markets, where the UK has trailed well behind the US and some European nations.

Under rules set out after the financial crisis, bonds issued under £100,000 are classed as retail products and subject to closer scrutiny and paperwork for companies. The changes have inadvertently dissuaded firms from issuing smaller denominations and shut out individual investors from the market.

In a report last week, Barclays found that US retail investors held some $6.2 trillion in debt securities at the end of the third quarter of 2024, while just 36 corporate bonds from 21 firms were listed in the UK’s orderbook for retail bonds.