The FCA implements major UK listing regime changes to attract companies to list in UK

From Morningstar.: 2024-07-11 06:29:00

The Financial Conduct Authority (FCA) will implement a significant overhaul of the UK’s listing regime by the end of the month, introducing new rules for companies seeking to sell shares publicly. This marks the biggest changes to the regime in over three decades.

Concerns arise over the decline of the UK’s public equity markets as fewer companies list in London, with a 40% drop in listed companies since 2008. Larger companies acquiring smaller ones and companies choosing overseas markets for IPOs are contributing to the trend.

Politicians express worries about London’s ability to attract new entrants, with high-profile companies opting for listings in other markets. The UK eagerly awaits a technology listing that delivers for investors in the long term.

The UK’s new chancellor of the exchequer, Rachel Reeves, views the changes as a “significant first step” towards boosting the country’s financial services sector and attracting innovative companies to list in the UK.

The new listing rules, effective from July 29, 2024, aim to simplify the process for companies seeking to list in the UK, moving towards a “disclosure-based” system to provide investors with sufficient information.

Investors initially expressed concerns over the potential dilution of standards with the new rules, fearing a drop in governance quality. While generally well-received, experts urge caution not to lower standards too much to maintain robust governance in the market.

Despite positive reception, fund managers emphasize that more than just a listings overhaul is needed to address the UK’s capital markets challenges. Incremental changes are seen as beneficial, but further steps are necessary to enhance market competitiveness and remove the UK’s valuation discount globally.



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