FCA moves to ‘simplify’ IPO rules as Arm snubs London

FCA IPO rules Image credit: Shutterstock

The Financial Conduct Authority (FCA) is looking to “simplify” the UK’s IPO rules in a bid to encourage more London tech listings.

The new proposals would scrap the option for a standard or premium listing and replace it with just one process for commercial company equity shares.

It comes just days after Cambridge chip firm Arm formally filed for a listing in New York, in a blow to the UK’s public tech markets.

“Our proposed reforms would significantly rebalance the burden of regulation to the benefit of listed companies and investors who are willing to set their own risk appetite and terms of engagement,” said Nikhil Rathi, chief executive of the FCA.

It is hoped the new structure will promote London’s markets to companies domestically and internationally. Other proposals being considered include scrapping eligibility requirements, exploring dual-class share structures and eliminating required shareholder votes on transactions like acquisitions.

The UK Listing Review says there has been a 40% reduction in the country’s IPO since 2008. Along with the FCA’s IPO changes, rules for secondary markets within the UK are also under examination.

“While regulation plays an important part, a company’s decision on whether, and where to list, is influenced by many factors so substantive change will require a concerted effort from government and industry as well,” added Rathi.

The FCA had previously considered relaxing listing requirements to entice Arm into a London IPO. Rathi has previously defended the regulator’s role in Arm’s UK snub.