FCA looks to attract growth firms with listing reforms

FCA looks to attract growth firms with listing reforms
(Luke MacGregor/Bloomberg

Reforms to the UK listing rules are one step closer after the Financial Conduct Authority published feedback to a discussion paper on the topic.

The regulator said in a statement today (May 26) it hopes to attract more high quality growth companies and give investors greater opportunities by changing the way companies list in the UK.

It is seeking industry feedback on a number of potential changes to the listing regime, including scrapping the choice of two segments.

Currently, firms listing in the UK have to decide whether to meet the criteria of either the premium or standard segments, which both have different ongoing requirements.

The new proposals would mean companies need to meet one set of criteria, and could then opt-in to a further set of obligations.

Jason Hollands, managing director at Tilney Smith & Williamson, said the overhaul is “long overdue”.

“The UK remains a premier equity market and is also highly international in flavour…but it needs to remain internationally competitive and alive to the pull of alternative destinations for companies seeking to raise capital,” he said.

He added the proposal to simplify the segments shows the direction the FCA wants to move to.

“The current premium segment eligibility includes items like a minimum revenue track record,” he said, adding that this can be hard for fast growing innovative companies to meet. 

“A more flexible approach is therefore under consideration that leans into disclosure standards rather than rigid rules.”

Clare Cole, director of market oversight at the FCA, said the London market is trusted the world over by companies looking to raise capital and those wishing to invest in them.

“That trust is created by strong standards and a world-leading concentration of buyers, sellers and the advisers who support them,” she said.

"The rules for companies who want to list here have not changed since the 1980s. Now is a good time to have an open conversation to make sure our rules are fit for the future, so we have a more accessible, competitive and growing market that is attractive to a diverse range of companies.”

Data from the UK listing review showed the UK accounted for 5 per cent of global IPOs, and has fallen 40 per cent since the peak in 2008.

The proposals follow reforms made by the regulator last year to lower the free float levels, allow certain forms of dual share class structures and the introduction of digital financial reporting.

“These changes promote broader access to listing for a wider range of companies at an earlier stage in their development and help investors use data faster to improve decision-making, while maintaining high standards,” the regulator said.

The call for feedback ends July 28.