Proposed new rules to encourage companies to list in the UK and other market improvements set out by financial watchdog

In May, the FCA consulted on what a new regime could look like. In its detailed proposals published today, it has kept the suggested change to a simplified listing regime with a single listing category, with streamlined eligibility and ongoing requirements, aimed at encouraging a greater range of companies to list in the UK and compete on the global stage. 

The FCA has also retained the idea, set out in the earlier consultation, 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 FCA 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. 

The proposals could entail 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 FCA has engaged widely ahead of the consultation and has taken feedback into account. The FCA 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 trade information 

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. The FCA is introducing a consolidated tape for bonds, for which the UK is one of the world’s largest markets, before outlining next steps for shares in 2024.  

Additionally, measures to significantly 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. 

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 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.'

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.'

Notes to editors

1. Read CP23/31: Primary Markets Effectiveness Review: Feedback to CP23/10 and detailed proposals for listing rules reforms[1].

2. In the work on the listing regime, the FCA has broadly maintained the approach set out in CP23/10[2], with certain adjustments based on consultation feedback. 

3. The FCA has made substantial progress toward delivery of the Edinburgh Reforms[3], aimed at improving UK wholesale secondary markets for their global users 

4. If the proposals for the new UK Listing regime are adopted, the FCA expects that it would go live early in the second half of 2024. 

5. 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. 

6. The FCA has already published final rules on some of the recommendations from Lord Hill’s UK Listing Review and the Kalifa Review on UK fintech.[4] Read PS21/22: Primary Market Effectiveness Review: Feedback and final changes to the Listing Rules.[5] 

7. The UK Listing Review[6], Chaired by Lord Hill, also made a recommendation to the FCA to consider changes to the Listing Rules in relation to SPACs (Special Purpose Acquisition Companies) in its final report published on 3 March 2021. The FCA published final rules[7] on strengthening investor protections in SPACs in July 2021 and feedback[8] to our discussion document in May 2022. 

8. Read our Consolidated Tape proposals[9] – The consultation closes on 9 February 2024 and the FCA intends to proactively engage with market participants in January. A competitive tender process will be run by the FCA to appoint a single CT provider for bonds in the second half of 2024, and the bond CT is expected to go live in the second half of 2025. 

9. Read our consultation on proposals to revise the transparency regime for bond and derivative markets[10]. The consultation period on bond and derivative transparency has been extended by 2 weeks as it is being published during a busy time of the year. The consultation closes on 6 March 2024.

10. Find out more information about the FCA[11].