FCA: UK listing regime has been ‘slow’ and ‘missed the boat’

The City watchdog has labelled the UK’s listing regime as being historically “slow” and missing the boat on attracting fast-growing tech companies.

Speaking at an event examining the new listing proposals put forward by the Financial Conduct Authority, Clare Cole, the regulator’s director of market overnight, said London’s listing rules have “often [been] slow and linked to European requirements.”

As a result of cumbersome practices, the regime has “missed the boat in some cases,” Cole said.

To fix the outdated structure of London’s listing rules, the FCA has launched an overhaul of the regime intended to make listing in the UK less costly. The measures incorporate recommendations from Lord Hill’s review of the listing regime and the Kalifa review of the UK fintech sector.

Changes include introducing a dual class share structure, which enable entrepreneurs to retain control over the direction of their company, and lowering the minimum free float level. The regulator has also proposed raising the minimum funding threshold. 

The proposals are intended to attract tech, fintech and fast growing businesses to London markets.

“This review has been described as a ‘once in a lifetime opportunity’ – I think that’s right and I certainly think this is exciting,” Cole said.

“We want investors, be they institutional or retail, to be able to share in the growth of these new and innovative companies.”

Cole addressed concerns over smaller firms’ diluted governance credentials, explaining fresh requirements to provide more information on board diversity and meeting climate goals would ensure smaller companies “meet the expectations of the investors.”

The FCA needs to channel the nimble approach it adopted during the pandemic into policy making, Cole urged. The regulator relaxed rules for listed companies during the height of the Covid crisis, such as allowing for delays in publishing financial statements.

The City watchdog launched a consultation seeking responses from financial services firms on the effectiveness of the UK’s listing regime, which closed on Tuesday. The new rules are expected to come into force by the end of the year.