Ministers urged to overhaul regulatory red tape to boost London’s markets
Ministers and regulators are being urged to push through a number of reforms to the UK’s capital markets to allow listed firms to raise fast and cheap cash in London, after a major review of the secondary market regime was published today.
The Secondary Capital Raising Review, chaired by Freshfields partner Mark Austin, was launched by the Treasury last year in a bid to boost the appeal of London as a place for firms to list and raise capital after floating.
Among a swathe of recommendations, Austin has called for greater involvement of retail investors in all fundraising, the abolition of expensive prospectus statement for the lion’s share of secondary fundraising, as well as removing the requirement for a sponsor to be appointed by firms.
The reforms have been designed to slash regulatory involvement and bureaucracy in fundraising, which Austin told Morning Wire would help boost the international appeal of London’s markets and listed firms to grow.
“What it seeks to achieve is to keep the UK capital markets competitive on a global stage and effectively reform the regulatory regime, and make it fit for purpose in the modern world in a way that means it bears comparison with any other listing jurisdiction in the world,” he said in an interview.
“And I think by some point next year, we will achieve that.”
Austin’s review also called for emergency changes introduced when the Covid-19 pandemic first hit in 2020 to be made permanent, which allow firms to issue up to 20 per cent of their issued share capital without first giving the original shareholders a right of refusal.
The FCA backed Austin’s proposals today and said “they provide a valuable and timely contribution to the ongoing market reform agenda and complement the FCA’s ongoing Primary Markets Effectiveness Review.”
Austin’s measures follow a major review of the UK’s listing regime last year, led by Lord Hill, which was designed to tempt more firms to float in the capital. In a statement today, Hill called Austin’s review a “thoughtful, well-judged package of reform”, that will make it chaper and quicker for firms to fundraise.
“Streamlining some of the processes will be good for both retail and institutional investors,” he added. “I hope that his recommendations can be put into effect quickly as we have to maintain the momentum for reform.”
The Treasury is expected to lay out its full response to the review in a speech by Chancellor Nadhim Zahawi tonight.
Retail investment platform Hargreaves Lansdown was among the firms to welcome the review today and called on government and the FCA to “advance retail investors’ rights as they take these recommendations forward.”