FCA reforms to enhance the effectiveness of UK primary markets

In 2015 the FCA committed to reviewing the effectiveness of the UK’s primary capital markets, and the regulatory framework governing them to ensure they continue effectively to serve issuers and investors.

Over the last 18 months the FCA has published several papers exploring potential enhancements to our regulatory framework.

Following consultation, the FCA is setting out final rules to:

• Reform the availability of information during the UK equity initial public offering (IPO) process; and
• Clarify and enhance some elements of the Listing Rules.

Policy Statement PS17/23 finalises changes to improve the range, quality and timeliness of information available to investors during the equity IPO process. There was broad consensus among respondents to Consultation Paper 17/5 that we should proceed with a package of measures aimed at restoring the centrality of the prospectus in the IPO process, creating the necessary conditions for unconnected IPO research to be produced, and addressing the underlying conflicts of interest that can arise in the production and distribution of connected research.

Policy Statement PS17/22 makes a number of enhancements to the Listing Regime including changing our approach to the suspension of listing for reverse takeovers, updating how premium listed issuers may classify transactions , and enabling property companies to better take into account asset values when seeking a premium listing. These proposals received overwhelming support from market participants.

Alongside the two policy statements, the FCA has also published a Feedback Statement (FS17/3).  The FCA has identified three areas that it thinks merit further exploration and stakeholder engagement including the relative positioning of standard versus premium listing, the provision of patient capital to companies that require long-term investment and retail access to debt markets. The FCA will publish proposals for consultation on these areas where appropriate in due course.

Christopher Woolard, FCA’s Executive Director of Strategy and Competition, said:

"The measures announced today bring together a significant package of reforms to ensure UK wholesale markets remain efficient and effective including improving the quality and timeliness of information in the IPO process and enhancements to the listing regime. Our aim is to ensure the UK’s primary capital markets remain of the highest quality and continue to serve issuers and investors.”

Notes to editors

1. FS17/3 and PS17/22: Review of the effectiveness of primary markets[1]
2. PS17/23: Reforming the availability of information in the UK equity IPO process[2]
3. The FCA also proposed, in CP17/21[3] – published on 13 July 2017 – a new listing segment for issuers that are controlled by sovereign countries. This consultation closed for comment on 13 October 2017. The FCA will decide whether to proceed with the sovereign-controlled premium listing category once responses to that proposal have been considered, and this does not form part of the above papers.
2. Christopher Woolard, FCA Executive Director of Strategy and Competition speech on Efficiency and effectiveness: our approach to primary markets[4]
3. On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
4. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.