City hails ‘critically important’ reform as FCA looks to revive IPO market
Top City figures have hailed a shake-up of the UK’s stock market rules today after the Financial Conduct Authority (FCA) announced a further batch of reforms designed to strip back red tape from London’s listings market.
In an announcement on Friday, the FCA revealed plans for a long-awaited prospectus overhaul which will look to reduce the administrative burden on listed companies looking to raise money and cut the the costs associated with a London listing.
Cumbersome paperwork and punitive costs have been pointed to as one of the main reasons behind London’s well-documented struggles to attract and retain firms on its stock exchange.
Mark Austin, a partner at Lathan & Watkins, who led a government-commissioned review of the UK’s capital markets, said: “The prospectus regime consultation released on Friday will reduce the costs of being listed on UK markets, make capital raising easier and drive increased retail investor participation.
“With these changes… the UK will have a match fit regime that bears comparison with any other and in fact will be more progressive than most.”
The changes to prospectus rules were announced just days before another set of FCA reforms to listing rules took effect.
The new rules, which were announced earlier this month and will start being implemented today, were dubbed the “biggest shake-up of listing rules in 30 years”, and will attempt to “streamline” how companies list their shares.
Delphine Currie, a partner at Reed Smith, said the new listing framework drawn up by the FCA “represent a critically important step towards putting the London market back on an equal footing with competitors in the US and the EU”.
“Faced with a steady flow of exits, taking no action simply wasn’t an option. Something had to be done and thanks to the reforms, London looks to be in a good position to take advantage of the significant pent-up demand for IPOs,” she added.
The sweeping reforms are widely viewed as an attempt to stem the much publicised difficulties that UK capital markets have had attracting the world’s most promising to firms pursue a London listing.
Research from professional services specialists BDO found that over a quarter of the country’s medium-sized companies are considering floating outside of the UK. Meanwhile a third of the firms surveyed called for even simpler regulation around listing mid-sized businesses.
Commenting on the results, Richard Austin, a partner at the firm, said: “Mid-sized businesses are the engine of our economy, supporting one in four jobs across the UK and accounting for considerable contributions to domestic investment. However, our research shows just over a quarter of these businesses could be considering a listing outside of the UK in order to scale.
“Making listing more accessible, broadening government grants and streamlining R&D tax credits to cover businesses of all sizes under one scheme could make it easier for them to remain in the UK and unlock millions of pounds of potential private sector investment.”