FCA takes up call for post-Brexit listing and fintech reform

Author of Kalifa Review welcomes market watchdog's bid to entice and retain business in the UK

by | July 5, 2021 | bobsguide

The UK’s Financial Conduct Authority (FCA) launched a consultation on primary markets reforms today, stepping up its efforts to boost post-Brexit incentives for financial services and fintech companies.

New measures would include having dual-class share structures for premium listings “to encourage innovative, often founder-led companies onto public markets sooner” and slashing the current free-float requirement from 25 percent to 10 percent.

Meanwhile, the minimum market-capitalisation threshold for both premium and regular listings would increase from £700,000 to £50m, giving investors “greater trust and clarity about the types of company with shares admitted to different markets,” according to the FCA.

Other proposals would amend disclosure guidance, transparency rules and the prospectus regulation to simplify the FCA’s rulebooks.

Clare Cole, director of market oversight at the market authority, said today’s proposals “are intended to encourage high quality companies to list earlier, and so increase the possibility of a wider investor base being able to access growth in these companies.”

The FCA consultation, which overall seek to entice more companies into the UK market as the country ushers in a new era outside the EU, comes off the back of the Treasury’s Listing Review put forward last year and the sector-led Kalifa Review published in February.

The latter aimed to ensure a more supportive environment for fintech companies post-Brexit, recommending, among others, having a dual-class share structure and reducing the free float requirement to make it easier for growing companies to list and scale up in the UK.

Ron Kalifa, author of the Report and chairman of Network International, welcomed the FCA’s announcement.

“I am delighted that the FCA is dedicating energy to look at ways to encourage fast-growth companies to start, build and stay in the UK,” he told bobsguide.

“We are already a global leader in fintech and many of these companies have the potential to be among the largest financial services companies of the future. They provide greater choice and better opportunities for consumers and SMEs, create additional jobs up and down the country and [are] a great catalyst for further growth.”

Iain Anderson, chair of Cicero/AMO and the Fintech Strategy Group, said the consultation was the natural next step in the government’s plans to reshape the UK’s financial markets after leaving the EU.

“The Chancellor last week started to flesh out the UK’s approach,” he commented, “and the regulators are now putting in place the details.”

“Both ministers and regulators now want the UK to attract global capital, and reforms to listing rules are a part of this.”

Getting companies to list in the UK has been a problem for a number of years, with the country accounting for just five percent of global IPOs between 2015 and 2020, and the number of listed companies falling by 40 percent since the 2008 financial crisis, according to figures cited by the Treasury. In today’s announcement, the FCA said it might consult further on wider listing regime changes.

The consultation will close on September 14, after which the market authority seeks to publish official rules by the end of the year.

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