The Financial Conduct Authority (FCA) is on a mission to improve the UK’s capital markets and enhance its position as a leading global financial centre. These reforms are focused on fostering long-term economic growth, recognising that success isn’t just about quick wins but about building a sustainable financial environment.
Recently, the FCA made significant changes to the UK’s listing rules for the first time in over 30 years. This overhaul aims to make the UK more attractive for companies looking to list, addressing concerns that complex regulations have driven businesses away. The FCA listened to feedback from various stakeholders to ensure these reforms would support growth and innovation.
Disclosure-Based Approach
At the heart of these reforms is a shift towards a disclosure-based approach. This means that companies will provide clear and relevant information to investors, allowing them to make informed decisions. The goal is to simplify the rules while maintaining high standards of corporate governance and accountability.
In addition to the listing changes, the FCA is introducing new public offers and admissions to the trading regime. This new framework is designed to make it easier and cheaper for businesses to raise money in the UK. By reducing the burden of disclosure requirements, the FCA hopes to encourage more companies to seek capital from UK markets.
The FCA is also addressing the way asset managers pay for investment research. By allowing the ‘bundling’ of payments for research and trade execution, smaller asset managers will find it easier to access the research they need. This change aims to create a more competitive and efficient market.
To keep pace with new technologies, the FCA is launching the Digital Securities Sandbox. This initiative will enable companies to test new trading and asset settlement technologies in a regulated environment. The sandbox approach is designed to support innovation while ensuring that market integrity is maintained.
Furthermore, the FCA is focusing on value for money in the investment landscape, particularly for pension schemes. With millions of people saving for retirement, the FCA wants to ensure that consumers receive the best possible returns. Greater transparency and clearer metrics will help shift the focus from costs to the value of investments.
Rules on Stock Markets
The Financial Conduct Authority (FCA) has announced major changes to the rules for companies looking to list their shares on UK stock markets. This is the biggest update in over 30 years and is designed to help more companies enter the market, which should provide more options for investors.
The new rules simplify the listing process by creating a single category for companies, making it easier for them to qualify for listing. This change aligns the UK’s rules more closely with those used in other countries, ensuring that investors have the necessary information to make informed choices while still being protected.
One significant change is that companies will no longer need shareholder votes on some major transactions, making the process quicker and more flexible. However, companies will still require shareholder approval for important events, like taking shares off the market or major mergers.
These changes come after extensive discussions with market participants. The FCA acknowledges that the new rules allow for a bit more risk but believes they are essential for driving economic growth. Starting from 29th July 2024, the new regulations will be in effect.
These reforms aim to provide a better environment for businesses and investors, ensuring the UK remains an attractive place for companies to list and expand.