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FCA to overhaul UK listing rules in bid to revitalise stockmarket

FCA to overhaul UK listing rules in bid to revitalise stockmarket

UK regulator the Financial Conduct Authority (FCA) has set out a simplified listings regime with a single category and streamlined eligibility for those companies seeking to list their shares in the United Kingdom.

The regulator said that the overhaul of the UK listing rules better aligns the UK’s regime with international market standards. It also ensures investors will have the information they need to make decisions about their money, while maintaining appropriate investor protections to hold the management of the companies they co-own to account.

The new rules remove the need for votes on significant or related party transactions and offer flexibility around enhanced voting rights. Shareholder approval for key events, like reverse takeovers and decisions to take the company’s shares off an exchange, is still required.

The changes to listing rules follow extensive engagement across the market. The FCA said it has been clear that the new rules involve allowing greater risk, but believes the changes set out will better reflect the risk appetite the economy needs to achieve growth.

The Armchair Trader has received numerous complaints from brokers and company CEOs over the quality of the previous listing rules, which were being widely blamed across the market for the relative paralysis of the UK equities market, especially in the small cap arena.

UK IPO market in the doldrums

According to the UK Listing Review, the number of listed companies in the UK has fallen by about 40% from a recent peak in 2008. Between 2015 and 2020, the UK accounted for only 5% of Initial Public Offerings (IPOs) globally, putting it eventually on a par with Kazakhstan.


A change to the regulations was widely anticipated following the election, as the previous government under Rishi Sunak did not seem to be applying sufficient focus to the issue.

“Any policy change that can incentivise or encourage more firms to list in the UK should be welcomed with open arms,” said Dan Moczulski, UK Managing Director at CFD broker eToro. “There is a lot of talk about growth from our new government right now. To deliver it, we need a thriving capital market. This requires an environment where companies see the UK as an attractive place to list, and where investors want to invest.”

Moczulski said that the virtuous cycle for UK IPOs is clear: more companies listing in the UK will attract more investors, both domestic and global, boost share prices, and generate more wealth, which in turn will encourage even more companies to list.

“This is arguably the holy grail for our economy in terms of growth,” Moczulski said. “While Jeremy Hunt set his sights on this goal, it’s now up to Rachel Reeves to make it a reality. Hopefully these new rules can help generate momentum for further policy initiatives, laying the foundation for a more dynamic and prosperous UK capital market.”

The new rules will apply from 29 July 2024.

More straightforward listings regime

Sarah Pritchard, Executive Director, Markets and International, at the FCA said: “A thriving capital market is vital in delivering investment to growing companies plus returns and choice to investors. That’s why we are acting to make it more straightforward for those seeking to list in the UK, while retaining vital protections so investors can help steer the businesses they co-own.”

Pritchard said that regulation is “only part of the answer” in helping the UK achieve sustainable growth. Other factors also play a significant role in influencing where a company decides to list.

“We’re committed to continually working together with all those who have a part to play in supporting a thriving UK capital market and thank everyone who has contributed to this work so far,” she said.

The new Chancellor of the Exchequer Rachel Reeves said: “The financial services sector is central to the UK economy, and at the heart of this government’s growth mission. These new rules represent a significant first step towards reinvigorating our capital markets, bringing the UK in line with international counterparts and ensuring we attract the most innovative companies to list here.”

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