FCA says listing changes could increase possibility of failures

In May, the FCA consulted on what a new regime could look like and proposed changes to the listing rulebook.

This included replacing its existing ‘standard’ and ‘premium’ listing segments with a single category for equity shares in commercial companies. 

In its detailed proposals published yesterday (December 19), it kept the suggested change of a single listing category aimed at encouraging more companies to list in the UK.

The FCA also retained the idea of moving to a disclosure-based regime - one that puts sufficient information in the hands of investors, so they can influence company behaviour and decide how they want to invest. 

The City watchdog is suggesting disclosures for significant transactions while keeping sponsor scrutiny of related party transactions, rather than the current mandatory votes. 

Shareholder approval for key events such as reverse takeovers and de-listing would, however, remain. 

Sarah Pritchard, executive director, markets and international, at the FCA said: “We are working to strengthen the attractiveness of UK capital markets and supporting UK competitiveness and growth. 

“As we do so, it is important that others consider what they in turn can do, to make sure the UK remains an attractive place for companies to raise capital. 

“We welcome feedback on our detailed proposals to make sure that we have the balance right as we seek to set the standards for the years and decades ahead.”

The FCA said proposals could result in an increased possibility of failures, but the changes set out would better reflect the risk appetite the economy needs to achieve growth.  

As a result, the City watchdog said it has engaged widely ahead of the consultation and has taken feedback into account. 

It now wants to hear from all sides of the market on the detailed proposals before a decision is made on the final rules. 

Bond and derivatives

The FCA is also delivering a key element of the Edinburgh Reforms by confirming the regulatory regime for a bond market consolidated tape. 

The tape will provide investors with trade and sales data quicker and more cheaply. 

Pritchard said: “The UK is a world leader for bond and derivative markets, and we want to make it better by ensuring investors have access to better, quicker, clearer and cheaper data.”

Additionally, measures to increase the information that is published in real time have been set out which will improve the bond and derivative markets’ ability to establish a fair price, and help investors buy or sell. 

These proposals will make sure that data that will go into the forthcoming bond consolidated tape is standardised, complete and of high-quality. 

The proposals will help investors hold their brokers accountable which will improve the competition for their services and enable market participants to manage risk and maintain market stability. 

Bim Afolami, economic secretary to the Treasury, said: “The UK is Europe’s leading hub for investment but it’s a competitive world and we are by no means complacent.

“We want to make the UK the global capital for capital, attracting the brightest and best companies in the world. 

“We are strengthening the UK as a listing destination, taking forward reforms to make it quicker to list, improve disclosure and make our capital markets more efficient and open."

sonia.rach@ft.com

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