How FTSE All-Share index listings are changing

The Financial Conduct Authority (FCA) has unveiled the biggest change to UK listing rules in 30 years, in a bid to stimulate growth after a slowdown in initial public offerings (IPOs).

It comes as a number of firms have shunned London in recent years, preferring to make their market debuts on the New York Stock Exchange or in other places across Europe.

According to the UK Listing Review, the number of listed companies in Britain has fallen by about 40% from a recent peak in 2008. Between 2015 and 2020, the UK accounted for only 5% of IPOs globally.

The FCA said the new regulations will better align UK stock market rules with wider international standards.

“A thriving capital market is vital in delivering investment to growing companies plus returns and choice to investors," Sarah Pritchard, executive director for markets and international at the FCA, said.

“That’s why we are acting to make it more straightforward for those seeking to list in the UK while retaining vital protections so investors can help steer the businesses they co-own.

“Regulation is only part of the answer in helping the UK achieve sustainable growth. Other factors also play a significant role in influencing where a company decides to list.

“We’re committed to continually working together with all those who have a part to play in supporting a thriving UK capital market and thank everyone who has contributed to this work so far.”

What is changing?

One major change is the elimination of the "premium" and "standard" listing segments, replaced by a single category called commercial companies.

Previously, premium listings had additional requirements, some of which will now apply to all listings, while others have been taken away completely.

Other key changes include removing the need for shareholder votes on significant or related party transactions and allowing flexibility around enhanced voting rights. Current rules force a shareholder vote on transactions between UK-listed companies and “related parties”.

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Cambridge-based chip firm Arm cited the shareholder voting hurdle as part of its decision to list in the US instead of London last year.

However, shareholder approval for key events, like reverse takeovers and decisions to take the company’s shares off an exchange, is still required.

The changes are also designed to remove frictions to growth once companies are listed, while continuing to place an emphasis on disclosure that puts information in the hands of investors to inform their investment decisions.

"Regulation has a role to play in making sure UK capital markets are race fit. That is why we have undertaken the biggest change to the listing rules in over three decades," Pritchard said at the Capital Markets Industry Taskforce conference in September.

"We looked at our regime holistically and determined that a change in philosophy was needed – moving towards a more disclosure-based regime, which puts the right information in the hands of investors so they can make their own decisions. This is a better approach for modern markets.

"It recognises that investors make their own decisions, daily, on where, how and what to invest in.

"We concluded that a 'one size fits all' regulator-prescribed approach, written in 2024, would not provide sufficient flexibility for the range of companies who may wish to list."

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Who does it apply to?

The rules will affect companies currently listed in or considering a listing in the UK, as well as existing and prospective investors in UK listed companies, including individual and institutional investors.

It also applies to the advisory community that advises and supports issuers undertaking an IPO and meeting ongoing obligations post admission to listing and trading, including existing and prospective sponsor firms, investment banks, law firms and accountancy firms.

UK exchanges and operators of markets for listed securities are also a part of this list, as are intermediaries who may facilitate, including providing execution and/or marketing of investments to issuers whether at IPO or in secondary markets.

Trade associations representing the various market participants above or member groups with thematic interests (for example, general capital markets, governance or stewardship) will also be interested.

Plus, wider financial market participants, such as research analysts and index providers, academics and other market commentators.

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Does this mean more risk?

The changes to listing rules follow extensive engagement across the market.

The FCA has been clear that the new rules "involve allowing greater risk", but it believes the changes set out will better reflect the risk appetite the economy needs to achieve growth.

Pritchard said: "Companies listed in the UK will still be expected to uphold high standards regarding disclosure and corporate governance. And shareholders retain the ability to exercise good stewardship to influence company behaviour and hold the management of the companies they co-own to account. These remain important and longstanding pillars of the UK markets."

When will the changes take effect?

The FCA said new rules will apply from 29 July, following a short implementation period, creating a “more straightforward” listing structure, aligning the UK's listing system with other markets, and simplifying and streamlining the process.

Chancellor Rachel Reeves, speaking shortly after the general election in July, said the move marks “a significant first step towards reinvigorating our capital markets”.

She added: "The financial services sector is central to the UK economy and at the heart of this government’s growth mission.

“These new rules represent a significant first step towards reinvigorating our capital markets, bringing the UK in line with international counterparts and ensuring we attract the most innovative companies to list here.”

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