FCA to consult on Hill and Kalifa reforms to UK markets

The UK’s Financial Conduct Authority has launched a consultation on a range of proposed reforms to the country’s primary markets rules, following two major reviews of the sector.

The UK Listing Review, chaired by Lord Jonathan Hill, and the Kalifa Review of the fintech sector made sweeping recommendations earlier this year to reform the City’s market regulations in a bid to make them more attractive to both companies and investors.

The FCA said it would seek comment on four areas of potential change to regulation from the reviews, including allowing a targeted form of dual-class share structures within the premium segment and reducing the required free float of shares to 10%.

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“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,” said Clare Cole, the FCA’s director of market oversight, in a 5 July statement.

The consultation will also consider increasing the minimum required market capitalisation for firms seeking to list in the UK from £700,000 to £50m, which the watchdog said would give investors “greater trust and clarity about the types of company” allowed to float in the City.

Meanwhile the FCA has also proposed a spread of minor changes to listing rules, disclosure guidance, transparency rules and the prospectus regulation rules to simplify its rulebook and innovate on older practices and technology.

The regulator has opted to analyse separately recommendations for changes to listing rules for special purpose acquisition companies, as blank-cheque vehicles boomed in popularity this year.

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“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,” said Cole.

“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.”

Lord Hill’s listing review found the number of listed companies in the UK had fallen around 40% from its 2008 peak, while London accounted for only 5% of all initial public offerings globally between 2015 and 2020.

The watchdog’s consultation is expected to last 10 weeks, with a closing date of 14 September. Should the feedback and the FCA’s board meet approval, the changes could be in place before the end of this year.

To contact the author of this story with feedback or news, email Emily Nicolle

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