CP23/10: Primary Markets Effectiveness Review – Feedback to DP22/2 and proposed equity listing rule reforms

Read CP23/10[1]

Why we are consulting

Following extensive engagement on our listing regime and the recommendations from the UK Listing Review, we are now putting forward, and inviting feedback on, significant reform proposals to improve our framework for listing commercial companies’ equity shares.

We propose to:

• replace our current standard and premium listing share categories with a single listing category for commercial company issuers of equity shares
• retain our sponsor regime, with modifications, to support companies primarily at the listing application stage, and for certain disclosure obligations thereafter
• retain discrete listing categories for other types of instrument, including closed-ended investment funds and different types of non-equity instruments

Our proposals provide a blueprint for significant reform, on which we welcome feedback and further evidence to assess the impact of these potential changes. As such, we have not included draft rules or a full cost-benefit analysis at this stage.

Who this is for

• UK-listed companies
• companies considering a UK listing
• existing and prospective investors in UK-listed companies, including institutional and individual investors
• the advisory community that advises and supports issuers undertaking an initial public offering (IPO) and meeting ongoing obligations post admission to listing and trading, including existing and prospective sponsor firms, investment banks, law firms and accountancy firms
• UK exchanges and operators of markets for listed securities
• intermediaries who may facilitate, including providing execution and/or marketing of, investments into issuers, whether at IPO or in secondary markets
• trade associations representing the various market participants above
• wider financial market participants, such as research analysts

Other groups or parties may also be interested in this consultation paper.

Next steps

We are consulting for 8 weeks on these preliminary policy proposals. Please respond by completing the online response form[2] or by sending a response to [email protected] by 28 June 2023.

As a follow-up to the preliminary proposals set out in this consultation paper, we aim to issue a further consultation on the wider proposed changes to our Listing Regime in autumn 2023. The follow-up consultation paper will include draft rules.

Online response form[2]

Background

The FCA’s strategic objective includes making sure financial markets function well. However, we have had feedback from a range of market participants, including through Lord Hill’s Listing Review[3], that our premium listing standards are regarded as overly burdensome and are deterring some companies from listing in the UK. Meanwhile, our more flexible standard listing segment for shares is poorly understood and not seen as attractive to companies.

In July 2021 in CP21/21[4] we opened a discussion on the purpose listed markets should serve within the wider ecosystem of public capital markets. Based on feedback received, we published a further discussion paper (DP22/2[5]) in May 2022. DP22/2 set out a possible single listing segment model to replace the current standard listing and premium listing categories for issuers of equity shares in commercial companies.

Our proposals aim to rebalance the regime and so improve the competitiveness of the UK equity market by creating a more attractive and compelling option for companies considering a share listing in the UK.

Many other factors will determine companies’ listing decisions aside from regulation, however, so we encourage a broader debate and collective action by government and market participants to further improve the UK ecosystem for public companies.