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FCA listing reforms embrace ‘increased possibility of failures’ 

Listing reform
Image credit: lunamarina / Shutterstock

The UK financial regulator has proposed simplified and more risk-friendly reforms to public listings in an effort to encourage more IPOs.

The Financial Conduct Authority (FCA), after a consultation in May, has recommended simplifying the listing regime by introducing a single category for all participating companies, as opposed to the current system of standard and premium listings that come with different levels of required compliance.

The financial regulator said that establishing a singular process with “streamlined eligibility” could encourage a “greater range of companies” to list in the UK.

The FCA has also retained a proposal that came from earlier consultations that would remove the requirement for mandatory shareholder approval of significant transactions, excluding reverse takeovers and delisting.

The watchdog acknowledged the proposals “could entail an increased possibility of failures”. However, it claimed the changes would “better reflect the risk appetite the economy needs to achieve growth”.

Cambridge semiconductor firm Arm opted for a New York listing for its blockbuster IPO in September. It came despite lobbying efforts from the UK government for a London listing. Rene Haas, chief executive of Arm, has not ruled out the possibility of a dual listing in New York and London.

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

“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.”

The recently appointed economic secretary to the Treasury, Bim Afolami, who replaced predecessor Andrew Griffith in the November reshuffle, said that by making reforms to “make it quicker to list,” the UK can become the “global capital for capital, attracting the brightest and best companies in the world”.

Proposals to reform the UK public listing requirements have not come without pushback, however.

In June, responding to the FCA’s initial consultation, a handful of major UK-based pension schemes expressed concern that loosening listing requirements would harm London’s reputation and “roll back fundamental investor protections”.