FCA proposes listing regime revamp to make UK more competitive
The UK’s Financial Conduct Authority (FCA) has outlined proposals designed to simplify the rules companies must adhere to in order to list shares in the UK.
FCA proposes simplifying UK listing regime
The revamped listing rules would be “more effective, easier to understand and more competitive”, the regulator says.
FCA CEO Nikhil Rathi says: “While regulation plays an important part, a company’s decision on whether, and where to list, is influenced by many factors.
“Our proposed reforms would significantly rebalance the burden of regulation to the benefit of listed companies and investors who are willing to set their own risk appetite and terms of engagement.”
The new rules would promote transparency and disclosure rather than hem tightly to regulatory needs and concerns, improving the attractiveness of listing in the UK and providing a wider range of investment opportunities for investors.
Proposed reforms include scrapping the current two-tier system of ‘standard’ and ‘premium’ and replacing them with a single category.
The FCA believes a single equity category would remove eligibility requirements that can deter early-stage companies, be more permissive on dual-class share structures and remove mandatory shareholder votes on transactions such as acquisitions to reduce frictions to companies pursuing their business strategies.
Listings in the UK have fallen 40% since 2008. Between 2015 and 2020, the UK accounted for only 5% of Initial Public Offerings (IPOs) globally. The FCA says many firms consider the UK’s current listing regime as “too complicated and onerous”.
Since the UK left the EU two years ago, the regulator has reformed the regime with an eye to boost growth and competitiveness by lowering free float levels, allowing certain forms of dual-class share structures and introducing digital financial reporting.
Rule changes to improve how equity secondary markets operate, as part of the Wholesale Markets Review, are also in the pipeline, with a view to enhance transparency and promote competition and growth.
