FCA to impose new listing regime on UK Stock market: Morningstar insights

by | Jun 10, 2024

The Financial Times reported this morning that the FCA is poised to approve its biggest overhaul of listing regime in 40 years, aimed at boosting London’s stock market.  

Lindsey Stewart, Director of Stewardship Research and Policy, Morningstar Sustainalytics, comments: “The FCA appears set to approve a wide-ranging overhaul of the UK Listing Rules in the coming weeks. As you could expect from any major regulatory revamp, the proposals under consideration have divided opinion. Last week’s Investment Association conference featured the latest call for the London market to reject a culture of ‘safetyism’, and it appears that the FCA is prepared to consider a higher-risk regulatory environment in search of potential higher rewards.

The big question, though, is whether the UK can create a more attractive market by introducing features that most institutional investors have said they don’t want. With only a few exceptions, institutional investors have vocally rejected proposals to facilitate dual-class share structures for companies listed on the main market, and reductions in shareholder rights when major transactions take place.

So, as with the corporate governance code last year, there’s a continued tension between those who want to reduce restrictive disclosure and due-process requirements to create a more risk-tolerant environment that could encourage new listings, and those who believe such an outcome is not worth risking the UK market’s reputation for high standards of investor protection. There’s a clear direction of travel away from perceived safetyism, but the matter is far from settled.”

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