The UK is looking to roll out the welcome mat and encourage companies from around the world to list in London, according to an FCA discussion paper published on Thursday.
Figures show that £16.9bn was raised in UK initial public offerings (IPOs) in 2021, the best annual performance since 2007. An impressive feat given the world was still mired in the pandemic, so it’s little wonder that the FCA is looking to capitalise on the interest and smooth the path for other companies to follow suit.
Clare Cole, director of market oversight at the FCA, said: “The London market is trusted the world over by companies looking to raise capital and those wishing to invest in them.
“That trust is created by strong standards and a world-leading concentration of buyers, sellers and the advisers who support them.
“The rules for companies who want to list here have not changed since the 1980s. Now is a good time to have an open conversation to make sure our rules are fit for the future, so we have a more accessible, competitive and growing market that is attractive to a diverse range of companies.”
Flexible, simple and appropriate
Ultimately, the UK watchdog is looking to make it more straightforward for companies to list here. The reforms being discussed in the paper are:
– Ensuring that the value of being listed is simpler to understand by removing complexity that is not serving a genuine and defined purpose.
– Promoting broad access to listing for a wider range of companies, while continuing to set clear, simple and robust minimum ongoing standards for listed companies, providing greater investment opportunities for investors on UK markets to empower investors to conduct their own decision making over the suitability of listed issuers to meet their investment needs through clear, high-quality disclosures.
– Allowing issuers and investors flexibility to agree where additional shareholder engagement, overseen by the FCA, is appropriate.
Don’t forget retail investors!
Investment platform Interactive Investor (II) has said it will “be considering the proposals in detail”, but reiterated its calls for a quota system at IPO for retail investors, “to ensure that private investors have a seat at the table”.
II said it is “highly supportive” of the reform but wants to “make sure it doesn’t come at the expense of retail investor rights”.
In particular, the platform highlighted the FCA’s desire for investors to make their own decisions about suitability. II has called for a “very radical reform of the prospectus regime” given that these documents “are still going to be intimidating to your average retail investor”.
Chief executive Richard Wilson (pictured) said: “It’s time to break the old school club that has undermined the interests of retail investors for far too long. We are hugely supportive of plans to make the UK a more competitive place to list, but private investors must have a seat at the table, they must be treated fairly.
“So, we reiterate our calls for a quota system.”
He added: “Without legislation, we fear there will be very little change. But we’d also like to see plain English enshrined in legislation, because shareholder communications written in legalese disenfranchise private investors and perpetuate the status quo.”
