The UK Securities and Exchange Commission has proposed a one-stop shop to simplify and speed up listing of companies. It is the biggest shake-up of its kind in three decades to help London better compete with New York and the European Union centers after Brexit.
The UK accounted for just 5% of global IPOs between 2015 and 2020, with the number of listings down around 40% from the peak in 2008. The government has failed to persuade British chip designer Arm to go public in London rather than New York.
The proposal largely mirrors a discussion paper from last year that had raised concerns about a return to “light-touch” regulation.
“We are working to strengthen the attractiveness of the UK’s capital markets and support UK competitiveness and growth,” said Sarah Pritchard, FCA executive director for markets and international, in a statement.
It is important that others consider what they can do in turn to ensure the UK remains an attractive place for companies to raise capital, as listing rules are not the main reason for choosing a location, the FCA said.
The FCA has proposed relying more on disclosure by companies rather than specific rules, transferring more of the risk of an IPO to investors.
Companies would disclose any proposed significant corporate transaction, rather than the current mandatory shareholder vote, which can be time-consuming in fast-paced competition.
However, shareholder approval of a reverse takeover or delisting would remain and written agreements would have to be reached with the majority shareholders.
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Britain is seeking to change stock market listings and other financial rules to boost growth at a time when private money is needed to invest to help the country meet net-zero targets.
“The UK is Europe’s leading investment destination, but the world is highly competitive and we are by no means complacent,” said British Financial Services Minister Bim Afolami.
The EU is already in the process of adopting a law to help enable more listings on the bloc’s stock exchanges.
The FCA has warned that any easing of regulations must be accompanied by a change in investors’ understanding and attitudes to risk.
“The proposals could lead to an increased likelihood of failure, but the changes set out would better reflect the risk appetite the economy needs to deliver growth,” the FCA said.
UK Finance, a banking industry body, said the proposals strike the right balance between managing risk and driving growth, which will significantly help attract more IPOs.
The 400-page detailed proposals will be put out for public consultation by March, with final rules due to come into force in the second half of 2024.
The FCA also confirmed new rules for a “consolidated band” for the bond market, or real-time transmission of transaction prices, to help investors find the best deals.
“The proposals will help investors hold their brokers to account, which will improve competition for their services and enable market participants to manage risks and maintain market stability,” the FCA said, adding that it will launch its next year I will present the next steps for a share price band.
The EU has passed a law regulating exchange bands for stocks, bonds and derivatives. (Reporting by Huw Jones; Editing by Hugh Lawson)
2023-12-19 23:09:33
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