FCA shakes up listing rules but ‘more work to do’

The industry has largely welcomed new FCA rules to attract exciting companies to London’s exchanges, but there is a general consensus that the changes should be the start of a comprehensive package of measures to improve London’s standing on the global stage.

The FCA has published new rules on listings that align the UK with international markets in a bid to bolster London’s troubled stock markets.

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The policy statement released today, which begins “UK capital markets are the engine room of our economy”, outlines a series of changes to the listing rules, including changes to shareholder voting requirements and the abolition of “premium” and “standard” listings, to be replaced by a single category.

UK authorities have been under pressure to act to support London’s capital markets, and today’s FCA policy is a direct result of the initial work begun by the last government.

“A thriving capital market is vital to delivering investment to growing businesses plus returns and choice for investors. That’s why we are acting to make it easier for those looking to list in the UK, while retaining key protections so investors can help to govern the companies they part-own,” says Sarah Pritchard, Managing Director, Markets and International, at the FCA.

“Regulation is only part of the answer to helping the UK achieve sustainable growth. Other factors also play a significant role in influencing where a company decides to list. We are committed to continually working alongside all those who have a role to play in supporting a thriving UK capital market and thanks everyone who has contributed to this work so far.”

As the FCA does its part to promote UK capital markets with these early and targeted regulatory changes, the industry will also need to do its part to capture the interest of global companies seeking a listing.

“The FCA has simplified the rules for companies looking to list in the UK,” explained Matt Britzman, senior equity analyst, Hargreaves Lansdown. “This comes after the UK has been rejected by companies, both new and existing, due to an over-complicated system and valuations that lag behind some of the overseas markets on offer. Simplified listing rules are a first step, but there is still more work to do if Britain wants to regain a reputation for nurturing exciting new businesses.

London was once seen as a global powerhouse for international companies looking to raise capital. However, the number of companies listed in London has plummeted and IPOs have slowed to a snail’s pace.

The reaction to today’s rule changes has been positive and seen as a step in the right direction, yet some signal the new Labor government has its work cut out to return London to its former glory.

“Any policy changes that could stimulate or encourage more companies to list in the UK should be welcomed with open arms,” ​​said Dan Moczulski, CEO UK, eToro.

“There is a lot of talk about growth from our new government right now. To deliver that, we need a thriving capital market. This requires an environment where companies see the UK as an attractive place to list and where investors want to invest.

“The virtuous cycle is clear: more companies listing in the UK attract more investors, both domestic and global, boost share prices and generate more wealth, which in turn encourages even more companies to list. This is arguably the Holy Grail for our economy in terms of growth.While Jeremy Hunt is aiming for this goal, it is now up to Rachel Reeves to make it a reality.Hopefully these new rules can help create momentum for further policy initiatives, and lay the foundations for a more dynamic and prosperous British capital market.”

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