Watchdog unveils plans for a shakeup of the listing rules to stop the city’s exodus
The city’s watchdog has revealed plans for a shake-up of listing rules designed to help halt an exodus of companies from London to New York.
The reforms proposed by the Financial Conduct Authority (FCA), which represent the biggest rulebook change since the 1980s, are expected to be in effect by the end of this year or early 2024.
Lord Hill, the author of an earlier review of the listing regime, said if implemented it would enable London to be ‘on a par with our international competitors’.
Shake-up: Listing reforms proposed by the FCA, which represent the biggest rulebook change since the 1980s, are expected to be in effect by the end of this year or early 2024
However, the Institute of Directors warned that the high standards of the city itself were an asset to the UK ‘and should not be watered down’.
Cambridge-based chip designer Arm’s decision to opt for a Wall Street float this year sparked self-examination in the Square Mile, adding to the pressure to change.
The shake-up is said to be aimed at simplifying the rules by ending the distinction between “standard” and “premium” listings, the latter of which are subject to more rigorous testing.
Only companies with a premium listing are eligible to participate in the FTSE 100 and FTSE 250, so removing the distinction would pave the way for more companies to join them.
There would also be more leeway for companies with dual-class equity structures, allowing founders to exercise more voting rights than other investors over their companies.
And there would be an elimination of the requirement for shareholder votes to approve major acquisition deals.
The UK’s listing regime is one of the factors responsible for a 40 per cent drop in the number of companies choosing to go public here since 2008.
Last week, London Stock Exchange boss Julia Hoggett told MPs that the rules were ‘stuck in aspic’.