FCA consults on reform of UK primary markets

The FCA has today launched a consultation on a series of proposals to reform the UK primary markets, building on the recent UK Listing Review and the Kalifa Review of UK FinTech.

The regulator is consulting on the following measures:

• Allowing a targeted form of dual class share structures within the premium listing segment to encourage innovative, often founder-led companies onto public markets sooner, and so broaden the listed investment landscape for investors in the UK.

• Reducing the amount of shares an issuer is required to have in public hands from 25% to 10%, reducing potential barriers for issuers created by current requirements.

• Increasing the minimum market capitalisation threshold for both the premium and standard listing segments for shares in ordinary commercial companies from £700,000 to £50m. Raising the MMC will give investors greater trust and clarity about the types of company with shares admitted to different markets.

• Making minor changes to the Listing Rules, Disclosure Guidance and Transparency Rules and the Prospectus Regulation Rules to simplify the FCA’s rulebooks and reflect changes in technology and market practices.

Alongside this, the FCA has set out a discussion seeking views on the overall structure of its listing regime and whether wider-reaching reforms could improve the longer-term effectiveness of the regime.

Clare Cole, director of market oversight at the FCA, said: “Effective public markets are critical in enabling companies to finance their businesses, which in turn creates growth and jobs for the UK economy. These proposals are essential if we intend for the UK to continue to be a modern and dynamic market. Today, we are acting assertively to meet the needs of an evolving marketplace.

“Our proposals should result in a wider range of listings in the UK, and increased choice for investors while we continue to ensure appropriate levels of investor protection. They are intended to encourage high quality companies to list earlier, and so increase the possibility of a wider investor base being able to access growth in these companies.”

The consultation will be open until 14th September 2021.

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