Regulator mulls audit changes to attract Chinese listings
The audit regulator is considering a temporary change in its accounting rules which would make it easier for Chinese firms to list in London.
The proposal is the latest regulatory reform designed to make the UK a more attractive place for international companies to list.
In a statement, the Financial Reporting Council (FRC) said it would consult on whether Chinese-registered firms should temporarily be allowed to follow Chinese accounting rules when listing global depository receipts (GDR) in London.
GDRs are financial instruments issued by banks which represent ownership of shares in a foreign company when those shares are traded abroad.
They enable international companies to access investors worldwide by listing on stock exchanges outside their home market.
The FRC said its proposal was designed to address a “perceived barrier” discouraging some Chinese firms from choosing the UK as a listing venue.
“The proposed amendment is intended to support a shared wider Government objective of boosting UK economic growth and strengthening London’s global market competitiveness, while ensuring that appropriate safeguards remain in place,” the FRC said.
The proposed changes to the accounting rulebook would automatically cease two years after the date of implementation, the FRC said, unless it decided to extend the policy.
“The proposed change is narrowly scoped, time‑limited and includes safeguards designed to uphold investor protection and market integrity, pending a longer-term legislative solution,” it said.
It comes after the Chinese fast-fashion brand Shein shelved plans for a blockbuster listing in London last year, eventually choosing Hong Kong after facing intense regulatory scrutiny.
The FRC’s proposals are the latest in a series of measures from the UK’s financial regulators to make London a more attractive destination for firms looking to list.
Last month the Financial Conduct Authority (FCA) said it will start collecting and publishing all available data on share-trading in an attempt to show that liquidity in UK public markets is not as bad as it is often thought.
The City watchdog has already pushed through a number of changes to make London a more attractive listing destination to address the recent drop-off in IPOs.