On 3 May 2023, the FCA published Consultation Paper 23/10 ‘Primary Markets Effectiveness Review: Feedback to DP22/2 and proposed equity listing rule reforms’ (CP23/10). In CP23/10 the FCA sets out proposed equity listing rule reforms as well as its feedback to its earlier discussion paper on the UK listing regime, as part of the Primary Market Effectiveness Review.

Following extensive engagement on the existing listing regime and the recommendations from the UK Listing Review, the FCA is now putting forward and inviting feedback on significant reform proposals aimed at improving its framework for listing commercial companies’ equity shares.

CP23/10 also provides further context on market developments since its earlier discussion paper.

Proposals

In CP23/10, the FCA is proposing to replace standard and premium listing share categories with a single listing category for commercial company issuers of equity shares.

The proposed framework aims to be more straightforward with a clear purpose. Under the proposals, requirements would be focussed on transparency for investors to support decision-making and sponsor oversight at the listing gateway, to ensure companies can meet the FCA’s standards. The FCA’s intention is that a single equity category would remove eligibility requirements that can deter early-stage companies, be more permissive on dual class share structures and remove mandatory shareholder votes on transactions, such as acquisitions, to reduce frictions for companies pursuing their business strategies.

The current sponsor regime would remain, with modifications, to support companies primarily at the listing application stage and for certain disclosure obligations after that stage. The FCA would also retain discrete listing categories for other types of instrument, including closed-ended investment funds and different types of non-equity instruments.

The proposed changes aim to provide a simpler and more accessible UK listing regime for companies, thus improving the attractiveness of listing in the UK and providing a wider range of investment opportunities for investors. By publishing CP23/10, the FCA hopes to encourage an ‘open discussion’ about the change to risk appetite that a listing regime based on disclosure and engagement, rather than regulatory rules, would require. On that basis, the consultation does not include draft rules or a full-cost benefit analysis at this stage.

Next steps

The deadline for feedback to CP23/10 is 28 June 2023.