UK’s Proposed Bill Paves the Way for New Stock-Listing Rules

The British government on July 19 set out plans to bolster the competitiveness of the U.K. as a global financial center to compete with Wall Street and consolidate its position in Europe after Brexit. 

Nadhim Zahawi, who was appointed on July 5 as the new Chancellor of the Exchequer, unveiled the proposed legislation that would replace hundreds of European Union financial regulations and “unleash the power of enterprise, boost innovation and support job creation,” he said. 

The Financial Services and Markets Bill will be introduced on July 20, and it will give regulators more discretion to rewrite rules on topics such as stock-market listing and green finance. But it will also add new obligations for regulators who will now have as a secondary objective to boost the competitiveness of the country when they adopt rules and decisions, which could be seen as a mandate to not be overly strict. 

Another change the government is considering is to give politicians the power to oversee regulators’ rules. “One key change under consideration would enable politicians to rein in rules put in place by regulators such as the Bank of England, to increase regulators’ accountability,” Zahawi said. 

This announcement came just a few days after SoftBank stopped working on a London initial public offering for chip designer Arm. The recent turmoil in the U.K. government with the resignation of Boris Johnson was cited as one of the reasons for the conglomerate to pause the listing. Boris Johnson has been personally involved in the conversations to convince SoftBank to list the U.K. company in London, but SoftBank founder Masayoshi Son has previously said that Arm was most likely to list in the U.S. 

In addition to the Financial Services and Markets Bill, Mr. Zahawi also set out the progress made in a number of areas that will help to consolidate the U.K. as a global financial center. This includes accepting the recommendations to the government of the Secondary Capital Raising Review, delivering reforms to the Prospectus Regime and Solvency II (a set of insurance regulations) and working of the application of Distributed Ledger Technology to sovereign debt issuance. 

The new rules are part of the government’s plan to empower regulators while reducing red tape and administrative burdens. Since the U.K. left the European Union in 2021, the government has sought to repeal EU rules and pledged to make the U.K. a more dynamic and regulatory-friendly country. 

The government may introduce the new bill today, July 20, but it will be one of the three candidates left in the race to succeed Boris Johnson who will need to push the bill in parliament. Rishi Sunak, the previous Chancellor of the Exchequer, is currently leading the polls to become the next Prime Minister, and many of the proposals suggested were developed under his tenure. 

Financial markets are not the only markets that may benefit from this light-touch approach. On Monday, July 18, the government unveiled a new proposal to regulate artificial intelligence in the country. Like the European Union, the U.K. adopted a risk-based approach, where only the high-risk activities will be regulated — but unlike the EU, which is proposing a comprehensive regulation to be enforced by a central authority, the U.K. is relying on a group of regulators to enforce the new AI principles. In fact, regulators are expected to guide and offer voluntary measures rather than prohibitions. 

Read more: UK Goes for Light Touch AI Regulations While EU Doubles Down 

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