The FCA proposes to reform and streamline the listing rules in the UK to help attract a wider range of companies, encourage competition and improve choice for investors.
The FCA wants to make the listing regime, the rules companies must follow to be allowed to list their shares in the UK, more effective, easier to understand and more competitive.
The FCA has been acting to improve the UK’s position for years. Within months of leaving the European Union, 2 years ago, the FCA significantly reformed the listing regime to boost growth and competitiveness.
While the UK has been Europe's biggest financial hub 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.
However, the listing regime in the UK has been seen by some issuers and advisers as too complicated and onerous.
This is why the FCA is proposing 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 the proposals requirements would be focussed on transparency for investors to support decision making and sponsor oversight at the listing gateway to ensure companies can meet the FCA’s standards.
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.
The proposed changes aim to provide a simpler and more accessible UK listing regime for companies, improving the attractiveness of listing in the UK and providing a wider range of investment opportunities for investors.
The FCA wants an open discussion about the change to risk appetite that a listing regime based on disclosure and engagement, rather than regulatory rules, would require.
Nikhil Rathi, Chief Executive of the FCA, said:
'London is a major international market with a deservedly good reputation globally among companies aiming to raise capital.
'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.'
The FCA's work on listings is a key part of its commitment to strengthen the position of UK wholesale markets, which is a priority in its 3-year strategy.
In 2021, the FCA moved quickly to improve the listing regime by lowering free float levels, allowing certain forms of dual class share structures and introducing digital financial reporting.
Improving secondary markets
Today, the FCA has also published rule changes to improve how equity secondary markets operate.
The rule changes support the FCA's commitment for transparency in equity markets and are part of the Wholesale Markets Review the FCA is conducting alongside government to tailor the UK’s rules post-Brexit, so they better suit UK markets and promote competition and growth.
Notes to editors
- Read CP23/10: Primary Markets Effectiveness Review – Feedback to DP22/2 and proposed equity listing rule reforms.
- The consultation period is open for 8 weeks, closing on 28 June 2023.
- Read DP22/2: Primary Markets Effectiveness Review: Feedback to the discussion of the purpose of the listing regime and further discussion.
- According to the UK Listing Review, the number of listed companies in the UK has fallen by about 40% from a recent peak in 2008. Between 2015 and 2020, the UK accounted for only 5% of Initial Public Offerings (IPOs) globally.
- The FCA has already published final rules on some of the recommendations from Lord Hill’s UK Listing Review and the Kalifa Review on UK fintech. Read PS21/22: Primary Market Effectiveness Review: Feedback and final changes to the Listing Rules.
- The UK Listing Review, Chaired by Lord Hill, also made a recommendation to the FCA to consider changes to the Listing Rules in relation to SPACs (Special Purpose Acquisition Companies) in its final report published on 3 March 2021. The FCA published final rules on strengthening investor protections in SPACs in July 2021 and feedback to our discussion document in May 2022.
- Rules relating to sponsors are in Chapter 8 of our Listing Rules; a sponsor is a person or institution which has approval from the FCA to act as an adviser to companies wishing to list publicly. A list of sponsors is maintained by us on our website.
- Find out more information about the FCA.