FCA presses on with listings shake-up in bid to revive London’s barren IPO market
The Financial Conduct Authority (FCA) confirmed today it will press ahead with a shake-up of the UK’s listing rules and warned its new regime could lead to an “increased possibility of failures”, as its looks to revive the UK’s public markets after a barren year of IPOs.
In a consultation document, the City watchdog said it will go ahead with plans first laid out in May, including merging the standard and premium segments of the market and scrapping a requirement for firms to get shareholder approval for major deals.
The move comes as part of the regulator’s bid to revamp the regulation of London’s public markets after a sharp drop off in IPOs in the City over the past two years.
London has been dealt a series of blows over the past 12 months as firms opt to float overseas, including the British chipmaker Arm. Some 34 firms have also completed or waived through deals to be taken private from London’s markets.
The UK’s listing regime has acted as a deterrent for firms looking to come to market and were regarded by some as “onerous” and “too complicated”, the regulator said in May, when it launched a discussion paper on the new measures.
In a statement, the regulator argued new rules would make the regime “more accessible, effective, and competitive.”
“We are working to strengthen the attractiveness of UK capital markets and supporting UK competitiveness and growth,” said Sarah Pritchard, executive director of markets and international at the FCA.
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 added.
The plans are now under consultation until March 2024, with the regulator expecting them to be rolled out from late 2024 if they are adopted.
The confirmation of the proposals from the FCA comes after the IPO market in London slumped to fresh lows this year amid a wider global slowdown.
The number of firms listed in London has now cratered by around 40 per cent from its peak in 2008.
Ministers have commissioned a slew of reforms to the rules in recent years in a bid to boost the appeal of the public markets, including Lord Jonathan Hill’s deepdive into the listing regime in 2020.
City figures welcomed the confirmation of the plans and said they could provide a boost to the shuttered IPO market.
“The FCA is striking the right balance between managing risk and encouraging growth,” said Conor Lawlor, managing director for capital markets and wholesale at UK Finance, the industry body.
Lawlor added there was “still work to do on parts of the sponsor regime” however, which governs the way that banks and corporate finance houses advise listed firms.
“The process has become too burdensome and costly, for both companies and those advising them,” he said.