The Financial Conduct Authority has given the green light to several proposals intended to streamline the UK listing regime. The regulator set out the plans to simplify UK listings rules following its consultation launched in May considering changes such as a single listings category.
Under the proposals, the premium and standard segments would be replaced with a new commercial companies category with streamlined eligibility criteria that would allow multiple class share structures at admission.
Companies would also no longer be required to seek shareholder approval for some significant transactions such as acquisitions, but would be required to produce enhanced market notifications providing financial information.
In cases of major events such as reverse takeovers, share buybacks and follow-ons, shareholder approval would still be required.
Last year's decision by UK chip designer Arm Holdings to list in the US was widely reported as a blow to the London Stock Exchange.
Arm CFO Jason Child told IFR the company would consider a secondary listing in London, but likely only after listing reforms have gone through.
Bim Afolami, economic secretary to the Treasury, said: “We are strengthening the UK as a listing destination, taking forward reforms to make it quicker to list, improve disclosure and make our capital markets more efficient and open.”
Julia Hoggett, chief executive of the LSE and head of digital and securities markets at LSEG, which owns IFR, said the reforms to the listing rules were “essential to levelling the playing field for UK-listed companies when they compete with international peers”.
Some shareholders were disappointed by the modifications, particularly on removing shareholder votes.
“There is little sign that the widely held and clearly communicated investor concerns about weakening corporate governance standards have been taken into account,” said Caroline Escott, senior investment manager at Railpen, who chairs the Investor Coalition for Equal Votes.
The consultation is proposing to allow dual-class share structures but Escott said research by ICEV had found it was “not in the interests of companies, investors and their beneficiaries, and capital markets as a whole to maintain dual-class structures over the mid-to-long term”.
While the FCA accepted the proposals could create an increased possibility of failures, it said the changes would better reflect the risk appetite needed to achieve growth.
According to the UK Listing Review, the number of listed companies in the UK has fallen by around 40% from its peak in 2008. It also found that between 2015 and 2020 the UK accounted for only 5% of global IPOs.
While considerable volume was seen in 2021, many listings have seen poor returns for investors, and two subsequent years of market volatility have led to depressed IPO activity in the UK and across Europe.
Consolidated tape
The regulator is seeking further feedback on the proposals in a consultation running to March 22, which, if adopted, are expected to go live in the second half of next year.
The regulator also said a consolidated tape for bond market data would go ahead. A consolidated tape for shares would also follow, with next steps to be outlined this year. The bond consolidated tape will go out to tender in the second half of 2024 and go live a year later.
“The UK is a world leader for bond and derivative markets, and we want to make it better by ensuring investors have access to better, quicker, clearer and cheaper data,” said Sarah Pritchard, markets and international director at the FCA.
Last year, the European Union set out a policy to aggregate various post-trade data for fixed-income securities into a single view. The US has had a bond consolidated tape for more than 20 years.