The Financial Conduct Authority (FCA) unveiled a “significant” revamp of its share listings regime on Thursday, aiming to help the London Stock Exchange (LSE) provide corporate financing and stay competitive with other global financial centers.
Major Changes to Listing Rules
The City watchdog announced that the new FCA listing rules, effective July 29, are the most substantial overhaul in more than 30 years. While the FCA cautioned that these changes introduce greater risk, it emphasized that such risks are necessary for economic growth.
“A thriving capital market is vital in delivering investment to growing companies, plus returns and choice to investors,” said Sarah Pritchard, FCA executive director of markets. “That’s why we are acting to make it more straightforward for those seeking to list in the U.K., while retaining vital protections so investors can help steer the businesses they co-own.”
FCA Listing Rules To Boost LSE : Addressing Criticisms
The revamped rules come in response to criticisms that Britain’s listing regime is overly complex and burdensome, causing companies to shift their stock listings to markets in the U.S. and Europe. The FCA highlighted that share listings in the U.K. have plummeted by 40% since the 2008 financial crisis, and Britain accounted for only 5% of global initial public offerings between 2015 and 2020.
Streamlined Procedures
Among the changes, the FCA is introducing a single category on the main market of the LSE by merging the premium and standard listing segments for equity shares in commercial companies. This move is expected to simplify the listing process, allowing companies to float in London with fewer obstacles. The shake-up also eliminates the need for shareholders to vote on significant or “related party” transactions, requiring companies to make disclosures instead.
