The London Stock Exchange could be simplified, scrapping the existing two-tiered structure, to encourage more start-ups to list.
The FCA has proposed crunching the existing two-tiered approach for listings, which splits companies between a “premium” segment that carries the highest levels of regulatory requirements and the “standard” segment which carries a lower bar of corporate governance.
Critics argue that this has created an unnecessary stigma around companies that have had to settle for standard listings, which has deterred some founder-led start-ups where the management want more flexibility over areas such as share classes. Standard listed companies are also not eligible for inclusion in the FTSE index.
“All listed companies would need to meet one set of criteria and could then choose to opt into a further set of obligations”, the FCA said in a policy document published for consultation on Thursday (26 May).
The number of listed companies in the UK has fallen by around 40% from a peak in 2008. Between 2015 and 2020, the UK accounted for only 5% of IPOs globally. The FCA wants to attract more fast-growing tech groups and start-ups in the face of increased competition from cities in the US and EU.
