FCA looks to open listing rules again in post-Brexit battle for IPOs

The City regulator is looking to remove barriers for companies to list in London as the English capital fights to remain competitive post-Brexit.

In a review published in March this year, Lord Hill suggested an overhaul of the UK’s listing regime to make the country a more attractive destination for initial public offerings, including barriers preventing special purpose acquisition companies looking towards London.

Financial Conduct Authority chief executive Nikhil Rathi has said that the watchdog will now look to go further and seek more ideas as to how more firms could be convinced to list in London.

“We will next month be bringing forward a consultation seeking views on removing other barriers to companies listing. This will increase opportunities for investors without compromising on safeguards,” Rathi told City & Financial’s virtual event City Week on 22 June.

“But our ambition is broader than this. We have an opportunity to act assertively to meet the needs of an evolving marketplace. So, our consultation will include a wider discussion seeking views on the purpose of the listing regime and whether wider-reaching reforms could improve its effectiveness.”

READ Everything you need to know about Lord Hill’s IPO and listing review

During his speech, the watchdog’s CEO also hit out at the lack of regulatory equivalence for UK firms since Brexit, the regime under which European Union regulators can grant market access to non-EU firms if the country’s financial rules are deemed sufficiently similar to its own.

“The lack of mutual equivalence creates obvious market inefficiencies and results in increased costs for consumers both here and in the EU,” he said, noting that the regulator has advocated for mutual equivalence with the bloc.

“We will in time need to consider the extent to which our objectives are at risk, and whether this state of affairs, with oddities such as this, is sustainable.”

The City was largely left out of the trade deal negotiated between the EU and the UK, secured just days before the formal transition into Brexit on 31 December 2020.

In March, the Treasury and the European Commission agreed a Memorandum of Understanding outlining a framework for post-Brexit cooperation among regulators. It has yet to be signed.

READ UK will not break from EU rules ‘for the sake of it’, top negotiator says

On 15 June, the Treasury’s director general of financial services Katharine Braddick said the UK is not going to diverge from EU regulation “for the sake of it”.

Speaking during TheCityUK’s annual conference, she added: “I think we have been quite transparent about where we are looking to make changes because we think it is material rather than just tinkering about”.

Separately, the FCA also announced on 22 June that it is consulting on a rollout of further climate-related disclosure rules, including the introduction of disclosure requirements for asset managers and pension providers.

To contact the author of this story with feedback or news, email Bérengère Sim

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