Starting Friday (Dec. 3), Britain’s regulatory body, the Financial Conduct Authority (FCA), will enforce a series of new listing rules in a move that is expected to strengthen the financial center’s ability to compete with New York and the European Union following Brexit.
According to a statement released by the FCA, the revised listings rules for exchanges such as the London Stock Exchange (LSE) and Aquis Exchange will allow a targeted form of dual class share structures within the premium listing segment — allowing company founders to retain a controlling voting interest that will, in turn, encourage them to list in the U.K.
The rule changes, which were put out to public consultation earlier this year, also include a reduction in the amount of shares an issuer must make available to the public, known as the free float, from 25% to 10%.
However, the minimum market capitalization (MMC) threshold for both the premium and standard listing segments for shares in ordinary commercial companies will increase from £700,000 to £30 million (about $931,000 to $40 million).
“Raising the MMC will give investors greater trust and clarity about the types of company with shares admitted to different markets,” the FCA said.
Reducing the free float while raising the MMC now puts London on the same level as the New York Stock Exchange, which is viewed as an attractive destination for many tech company listings.
Read more: FCA Chair: Investors Need Protection From Online Crypto Schemes
Commenting on the changes, the Director of Market Oversight at the FCA, Clare Cole, said this revision was necessary in order to meet the needs of an evolving marketplace.
“These changes ensure the UK’s markets maintain their reputation for dynamism, helping support the new types of companies seeking the investment that drives economic growth and by giving investors more choice with appropriate protection,” Cole said.
See also: FCA Chair Calls for Stricter Regulations on Platforms Promoting Crypto
Cole added that over the last few months, the FCA has “moved quickly” to improve on its rules in certain areas to encourage innovation in primary markets.
“By taking this agile approach, we are pleased that new IPOs in 2022 will be able to benefit from the revised rules,” Cole said.
Per Reuters, the London Stock Exchange welcomed the news saying it will help the U.K. maintain its position as a global financial hub, even though more can be done to ensure that the regulation is responsive to the evolving financing needs of companies.
Alasdair Haynes, CEO of Aquis Stock Exchange, also said that the changes, particularly the MMC requirement for the standard list, “will encourage SMEs [small and medium-sized enterprises] to list on a venue with proportionate regulation and support,” according to the Reuters report.
Learn more: SPACs — and B2B Listings – Gather Momentum Across 2021’s Finish Line
In August, the FCA published new rules to strengthen investor protections in special purpose acquisition companies (SPACs) and make it easier to list these publicly traded companies — which, unlike London, have been very popular on Wall Street, where $125 billion of SPACs have listed so far in 2021, per Reuters.
Related news: FCA Scraps 90-Day Reauthentication Open Banking Rule
In a separate move to remove barriers to growth and innovation in the U.K. payments space, the financial watchdog recently scrapped the 90-day reauthorization requirement, a move seen as a boon for the open banking sector.
Consumers using open banking services that give third-party providers (TPPs) such as apps or peer-to-peer (P2P) lending platforms access to their main bank account will no longer have to reconfirm permission with their account servicing payment service providers (ASPSPs) every 90 days.
See also: FCA Proposes Changes That Remove ‘Barriers’ to Growth And Innovation in UK Payments
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