UK watchdog signals go-ahead to radical overhaul of company listings

By Huw Jones

LONDON (Reuters) – Britain’s financial watchdog signalled on Monday that its plans to merge the London Stock Exchange’s two categories of company listings and dilute some shareholder rights were poised to go ahead in a bid to make the City more globally competitive.

Government and regulators have come under pressure from the financial sector to boost London’s attraction after Brexit saw Amsterdam overtake London to become Europe’s biggest share trading centre, and the European Union become a new rival in international listings.

The City also continues to face stiff competition in company listings from New York, where UK chip designer Arm chose to go public.

Earlier this year the Financial Conduct Authority (FCA proposed a single listing segment to replace distinctions between the stricter ‘premium’ and less onerous’standard’ segments on the London Stock Exchange, along with other changes which have raised some concerns about shareholder rights and good governance being diluted.

“We see good support for merging premium and standard listing segments into a new, single segment, with no cliff edge and generous transition arrangements,” FCA Chief Executive Nikhil Rathi told the annual Mansion House dinner in the City.

The watchdog also proposed scrapping the requirement for a shareholder vote on significant deals, apart from a reverse takeover, to help UK companies compete better in M&A auctions, putting Britain on an equal competitive footing with other countries in Europe.

“This disadvantage faced by UK-listed companies competing in global M&A is real and needs to be fixed,” Rathi said.

There would be more emphasis on disclosures to shareholders, and Rathi warned that the release of such information to investors would have to be rigorous given that more risk is being introduced into listings.

“We need acceptance that with more risk in the system, we will not, nor should we try to, stop every failure,” Rathi said.

Rathi said a consultation on detailed rules to flesh out the changes, along with a cost/benefit analysis, will be published shortly, with final rules published in the first half of 2024.

(Reporting by Huw Jones; editing by Jonathan Oatis)