The UK’s regulatory regime is a significant pillar of the broader public policy debate surrounding the future of our capital markets. There has been significant and positive progress made since Lord Hill published his recommendations in March 2021, including welcome changes to the proportion of shares required to be held by public investors (the so-called “free float”). The latest step in this story – the Financial Conduct Authority (FCA)’s recently published Primary Markets Effectiveness Review consultation paper (CP 23/10) – sets out its roadmap for reform of the UK listing regime. The regulator is seeking views on proposals for a less prescriptive and more disclosure-based approach to listing regulation and investment risk.

A modernised and innovative regulatory regime, which upholds robust and proportionate standards, is fundamental to ensuring that the UK continues to be a market of choice for investors and issuers, both domestic and international. We are pleased therefore that the FCA is approaching this latest package of reforms with ambition and openness in mind.

Our response

UK Finance members are generally supportive of the FCA’s view that the move to a more streamlined regime, with more emphasis on disclosure, will facilitate a closer connection between issuers and investors and reduce “friction” in the way equity capital is raised on the UK’s public markets.

Furthermore, members believe that the proposals will create a more agile listing environment open to a broader range of issuers by focussing on the key information and safeguards that investors value, thereby helping to deepen the pool of capital in the UK market. To achieve these objectives, members believe, however, that it is vital that adjacent regulatory regimes, including the sponsor regime, are adapted in parallel to ensure that a single, coherent and consistent regime is created.

To ensure that the move to a new regime is seamless, we also believe that changes to rules and requirements should be supported wherever possible by user-friendly and practical guidance as to how the FCA will implement and enforce the new regime. In our view, the increased flexibility intended by the regime should be strengthened by ensuring clarity, consistency, and predictability with regards to regulatory outcomes.

Our members are also engaging with the FCA on its policy proposals for the next steps in the development of a framework to replace the prospectus regime, following the enactment of the Financial Services and Markets Act 2023. We welcome the FCA’s intention to reshape regulation in this area to better meet the needs of issuers and investors in line with its commitment to strengthen the UK’s position in global wholesale markets.  

Further information

UK Finance and the Association for Financial Markets in Europe (AFME)’s full joint submission to CP23/10 can be read on our website. This work was produced with the support of Linklaters LLP, and with additional input from Allen & Overy.  

You can also find more information on our report, UK capital markets: Building on strong foundations

Thanks to Julie Shacklady, our Director, Primary Markets and Ali Campbell, Analyst, Capital Markets & Wholesale Policy for their help and assistance with this blog post.