UK launches new listing rules in bid to boost London Stock Exchange

General view of a dragonfly and the skyline of the City of London, the capital's financial district, as the Bank of England raises UK interest rates to 4%.

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The UK's Financial Conduct Authority (FCA) announced new rules for the country's stock market listings on Thursday in a bid to boost growth after a slowdown in initial public offerings.

The new rules, which come into force from July 29, will ensure the UK's listing system is more in line with other markets and will make it simpler and more streamlined, the FCA said in a statement.

The measures represent the biggest change to the listing regime in more than three decades, the FCA said. “They aim to help a wider range of companies list their shares on a UK stock exchange, increasing opportunities for investors,” the regulator added.

One of the major changes is the removal of the “premium” and “standard” listing segments. Instead, there will be a single overall category for stock listings, which has been named “commercial companies”.

Premium listings previously had additional requirements over standard listings. Some of these will be carried over and will now apply to all listings, while others have been removed.

“The new rules remove the need to vote on major or related party transactions and provide flexibility around enhanced voting rights. Shareholder approval for key events, such as reverse takeovers and decisions to delist the company’s shares from a stock exchange, is still required,” the FCA said.

Some rules regarding eligibility for listings will also change, such as removing the requirement for companies to provide historical earnings records.

The rules are a positive step forward for the U.K. IPO market, but could have gone further, Chris Haynes, a partner at law firm Gibson Dunn, told CNBC in emailed comments.

“The move to a single listing category with simplified eligibility criteria and ongoing disclosure-based obligations is one of a number of important initiatives which together should lead to greater IPO activity in the UK,” he said.

“In my view the FCA could have created more flexibility in some areas, particularly in relation to dual class share structures, but overall this is a good outcome,” Haynes added.

The new rules come at a time when the European listing market, and in particular the UK’s, is in freefall. Big tech companies have recently favoured the US for their listings, including British chip maker Arm, which chose to list on New York’s Nasdaq last year.

Euronextreported64 stock quotes on its platform last year, a significant dropSincethe 83 registrations it received in 2022.

The new rules were developed in response to the 2021 UK Listing Review which showed that the number of companies listed in the UK has fallen by around 40% since 2008 and that only 5% of global IPOs between 2015 and 2020 took place in the UK.

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