In an effort to revive flagging public company listings, the U.K.’s Financial Conduct Authority (FCA) is proposing reforms to make its market more attractive to issuers.
Following a consultation launched in May, the FCA outlined proposals to make its listing regime more “accessible, effective, and competitive” by streamlining and simplifying its requirements, and revising certain approval obligations.
Among other things, it is doing away with the “premium” and “standard” listing categories — adopting a single listing category, with streamlined initial listing and ongoing qualifications that, it said, is “aimed at encouraging a greater range of companies to list in the U.K. and compete on the global stage.”
The regulator is also reducing the obligations for shareholder approvals for certain transactions.
“The proposals could entail an increased possibility of failures, but the changes set out would better reflect the risk appetite the economy needs to achieve growth,” the FCA said in its consultation paper.
The reforms aim to reverse a decline in public listings, which has seen listings drop by about 40% in the years since the financial crisis.
The FCA also noted that the U.K. only accounted for only 5% of global initial public offerings (IPOs) between 2015 and 2020.
Similar concerns have arisen in Canada. In 2021, Ontario’s Capital Markets Modernization Taskforce issued a report documenting concerns about a decline in listing activity, and proposing a series of reforms designed to help reverse that trend.
Alongside the FCA’s final reforms to its listing regime, the regulator is also seeking to introduce a consolidated tape for bond trades, and to expand the information reported for bond and derivatives trades, in an effort to increase market transparency and efficiency.
Those proposals “will help investors hold their brokers accountable, which will improve the competition for their services and enable market participants to manage risk and maintain market stability,” it said.
The FCA said it will set a direction for consolidated equity trade reporting in 2024.
The proposed reforms to the listing regime are out for comment until March 22, 2024, and could take effect early in the second half of 2024, it noted.
The consolidated tape for bonds is expected to launch in the second half of 2025 — those proposals are also out for consultation until March 2024.
“We welcome feedback on our detailed proposals to make sure that we have the balance right as we seek to set the standards for the years and decades ahead,” said Sarah Pritchard, FCA’s executive director, markets and international, in a release.