There have been concerns lately that post-Brexit London is losing its allure as a stock market centre and the number of listed companies is falling.
According to the UK Listing Review, the number of listed companies in the UK has fallen by about 40% since 2008 and London gets only a small percentage of global IPOs.
If the plans go ahead the FCA would introduce a raft of reforms for the listed markets to encourage more firms to list and raise finance on the stock market.
The regulators wants to increase the number of listed companies to fuel investment in high growth areas such as fintech. Investors would also enefit from a wider range of companies to invest in, says the FCA.
The changes could include:
- Allowing dual class share structures to enable innovative, founder-led companies onto public markets sooner and broaden the “listed investment landscape” for investors
- Reducing the amount of shares an issuer is required to have in public hands from 25% to 10%, reducing potential barriers for issuers
- Increasing the minimum market capitalisation (MMC) threshold for the premium and standard listing segments for shares in ordinary commercial companies from £700,000 to £50m. The FCA says this will give investors greater trust and clarity about the types of company with shares admitted to different markets
- Making minor changes to the Listing Rules, Disclosure Guidance and Transparency Rules and the Prospectus Regulation Rules to simplify the FCA’s rulebooks
The recent UK Listing Review, chaired by Lord Jonathan Hill, and the Kalifa Review of UK FinTech made specific recommendations for improvements to the markets regime, the FCA said. The FCA’s proposed will aim to introduce some of the reforms proposed in the reviews.
The changes aim to reduce barriers to listing for companies.
Clare Cole, director of market oversight at the FCA, said the reforms proposed should generate investment in high growth companies.
She said: “These proposals are essential if we intend for the UK to continue to be a modern and dynamic market. Today, we are acting assertively to meet the needs of an evolving marketplace.
“Our proposals should result in a wider range of listings in the UK, and increased choice for investors while we continue to ensure appropriate levels of investor protection. They are intended to encourage high quality companies to list earlier, and so increase the possibility of a wider investor base being able to access growth in these companies.”
The FCA is consulting for 10 weeks on these proposals with a closing date of 14 September. Subject to consultation feedback and board approval, the FCA plans new rules in place before the end of 2021.