The proposals by the Financial Conduct Authority (FCA) would mean scrapping the current two-tier system, where firms decide whether to follow looser rules of a so-called standard listing, or the more rigorous standards of a premium listing. Instead, all companies would need to meet one set of rules, in order to simplify what some industry bodies have said is the UK’s “complex” and costly listing regime.
The proposal to relax London’s stock market rules is an attempt to attract more fast-growing startups instead of losing out to other financial centres such as New York, Paris and Frankfurt.
The UK is hoping to build on last year’s stock market boom, which saw companies raise £16.9bn on the London Stock Exchange. That was the strongest year for stock market fundraising since 2007.
However, the boom followed years of decline, with the number of companies listing in London having dropped by nearly 40% since the financial crisis. Between 2015 and 2020, the UK only attracted 5% of the world’s initial public offerings (IPOs).
The proposals follow recommendations put forward by the peer Jonathan Hill last year, who recommended the FCA slash the proportion of shares that have to be offered to outside investors from 25% to 15%, and allow companies to issue dual-class shares that give founders more control of listed firms.
