The UK Financial Conduct Authority (FCA) has ramped up its shake-up of stock market listing rules with a proposal to slash regulations set to be published today.
Regulatory changes aim to streamline listing regulations for the standard and premium segments in a bid to make the London stock market more competitive with its international counterparts.
The FCA is also proposing to remove mandatory shareholder votes on certain business decisions such as mergers and acquisitions.
"We want to encourage more companies to list and grow in the UK, versus other highly competitive international markets," FCA chief executive Nikhil Rathi told BBC Radio 4, stating that the proposal will "make it easier for companies to join the market quicker".
An insider told The Financial Times that “this is us moving at high speed”, adding that the industry was pushing the regulator to “move quickly”.
With year-to-date listings still in the single digits and 2022 being one of the worst on record, there is a sense that the clock is ticking to revitalise The City.
The industry is becoming increasingly worried about the spate of delistings and high-profile snubs being felt in the large, mid and small-cap segments.
British semiconductor giant ARM Holdings landed a £58bn blow to the Square Mile in March after opting to list on the New York Stock Exchange in what is likely to be the blockbuster IPO of the year.
Despite the government’s post-Brexit “light touch” approach to regulation in the science and technology sectors, ARM co-founder Jamie Urquhart said the UK’s current approach “couldn’t be any worse”.
ARM’s snub was a warning of things to come, with construction heavy hitters CRH and Kingspan announcing their own London departures, gaming blue-chip Flutter on the fence, and even HSBC under pressure from Asia investors to spin out its Asia-based operations.
Broker Numis Corporation was the latest in the small-cap space to announce a departure from the junior market after agreeing to be taken over in a £385mln all-cash deal tabled by Deutsche Bank, in what has become a running trend of take-private deals at the lower end of the market.
“While regulation plays an important part, a company’s decision on whether, and where to list, is influenced by many factors so substantive change will require a concerted effort from government and industry as well,” stated Rathi.
Companies have pointed to the higher valuations and deeper pools of liquidity they can get in New York compared to London.