London launches public review to strengthen primary equity market

On the 07/06/21 at 7:56AM
The measures considered would allow a targeted form of dual-class shares on the premium market to encourage listing of innovative companies.

The competition is heating up. London is making no secret of its determination to make its post-Brexit financial market more attractive and competitive. The Financial Conduct Authority (FCA) launched a public review on Monday on a series of reforms being put forth to make its primary markets more efficient.

The review will last until 14 September 2021. The chancellor of the exchequer, Rishi Sunak, had already raised several reform options on 1 July to ease financial markets directive rules, including changes in regulations imposed by the Markets in Financial Instruments Directive (MiFID 2).

The measures would, first, allow a targeted form of dual-class shares on the premium market to encourage innovative companies, which are often headed by the founders, to go public at an earlier stage, which would widen the listed investment landscape for investors in the United Kingdom.

In addition, the threshold of shares in free float would, under certain circumstances, fall to 10%, vs. 25% today, “thus reducing potential obstacles for issuers that have been created by the current requirements”.

The minimum market cap thresholds for premium and standard markets for ordinary commercial firms would rise from £700,000 to £50m. “The higher threshold would give investors greater confidence and greater clarity regarding the types of companies whose shares are admitted on the various markets”, the FCA said.

The FCA also plans to make some minor changes to listing, transparency and prospectus rules “to simplify and reflect changes in technology and market practices”.

Meanwhile, as part of the same document, the FCA has launched a review of the overall structure of its market listing regime in order to determine whether broader reforms could enhance its long-erm efficiency.

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