The Financial Conduct Authority (FCA) is planning to reform its listing rules to help attract a wider range of companies, encourage competition in the UK and improve choice for investors.

The regulator wants to make its listing regime, the rules companies must follow to be allowed to list their shares in the UK, easier to understand and more competitive.

Within months of the UK leaving the EU, two years ago, the FCA significantly reformed the listing regime to boost growth and competitiveness.

However, while the UK has been one of Europe’s biggest financial hubs for many years, listings in the UK have reduced by 40% since 2008, according to The UK Listing Review.

The decision by a firm to list is based on many more factors than regulation alone, such as taxation and the availability of capital. According to the FCA, the listing regime in the UK has been seen by some issuers and advisers as too complicated and onerous.

Therefore, the regulator is to propose significant changes to the listing rulebook, including replacing its existing “standard” and “premium” listing segments with a single category for equity shares in commercial companies.

Under these proposals, the FCA said its requirements would be focused on “transparency for investors” to support decision making and sponsor oversight at the listing gateway to ensure companies can meet its standards.

A single equity category would also 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.

“London is a major international market with a deservedly good reputation globally among companies aiming to raise capital,” chief executive of the FCA, Nikhil Rathi, said. “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.

“While regulation plays an important part, a company’s decision on whether, and where to list, is influenced by many factors so substantive change will require a concerted effort from government and industry as well.

“We want to encourage more companies to list and grow in the UK, versus other highly competitive international markets.”

Share Story: