Whilst equity listings and M&A activity were largely subdued throughout 2023, policymakers and industry stakeholders were busy progressing important regulatory initiatives. With continued momentum and collaboration, 2024 can be the year in which contemplation gives way to implementation and modernisations to the UK’s capital markets begin to bear fruit.  

What will we see in 2024? 

For our equity markets, the regulatory focus will be the FCA’s single equity segment proposals in CP 23/31 which, following extensive industry engagement, are currently set to go live in H2 2024. The next stage of the FCA’s reform of the prospectus regime will also commence, now new legislation has been laid in parliament. These advancements represent the culmination of a journey that began back in 2020 with Lord Hill’s UK Listing Review.  

Our members broadly support the FCA’s listing regime proposals, which remove many aspects of the regime long-viewed as uncompetitive compared to other equity markets, such as the required shareholder vote on significant transactions. A more accessible and streamlined regime, which strikes the right balance between managing risk and encouraging growth should help to make it easier to raise capital in the UK. There is still work to do, however, on aspects of the sponsor regime, especially as it is likely to apply to a broader range of companies. 

The listing regime is only one area within a patchwork of regulation applying to listed companies. In 2024, we will see more concrete proposals on prospectus regime reform. Our members broadly agree with the FCA’s high-level policy direction for public offers of equity, but it is important to also consider the bigger picture. Broad alignment between the new UK rules and those of equivalent regimes will help to avoid frictions in raising capital. Future-proofing our regime to allow it to embrace technological innovation will keep our markets nimble and competitive. Finally, the new regime is part of a broader regulatory disclosure framework applicable to UK listed companies, which encompasses periodic reporting and ad-hoc requirements. In 2023 we saw the government pause proposals to bring in new corporate reporting legislation. In 2024, we expect the FRC to revise existing requirements regarding internal controls and look forward to the FRC heeding the reinvigorated duty to foster growth in any such reform package. 

Consistency between intersecting regimes and coordination of policy objectives amongst UK government and regulators will be key to ensuring the continued success of the UK primary markets. It makes little sense for regulation to be alleviated to attract listings if ongoing obligations are significantly extended. We look forward to continuing to work with government, the FCA and the FRC throughout 2024.  

For M&A, the end of 2023 brought welcome proposals from the CMA to update its merger process guidance and a government call for evidence on the National Security and Investment Act. We are engaging on behalf of our members on both and will continue our dialogue with the Takeover Panel throughout 2024. 

What is the outlook for our markets?  

With interest rates currently expected to peak in key markets, a healthier M&A pipeline, and some tentative market confidence for the year ahead, signs are pointing in a positive direction. However, we are now well-accustomed to uncertainty, and cautious optimism is likely to remain in vogue. Regardless of how the year unfolds, what we do know is that the changes progressed today will help to make the UK a more attractive prospect for the companies and investors of tomorrow.   

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