FCA eases IPO rules – Investment Executive

The U.K.’s Financial Conduct Authority (FCA) is seeking to boost public listings by scrapping measures that were adopted to encourage the provision of independent equity research to accompany initial public offerings (IPOs).

Effective Wednesday, the FCA has dropped certain research-related requirements for IPOs — including a provision that required firms to wait seven days between receiving prospectus approval and publishing connected research, and requiring firms that issue connected research to share data with independent research providers.

These provisions were introduced back in 2018 in an effort to encourage more independent equity research to accompany IPOs. However, the regulator concluded that these measures didn’t work as intended, while adding costs and risks for issuers, without also providing benefits. 

Now, it’s dropping these requirements in an effort to make it easier to undertake an IPO — with the broader goal of improving the U.K.’s ability to compete in the global landscape for new listings.   

“These changes support our objective to enhance market integrity by removing unnecessary risk and friction from the listing process,” the FCA said in a policy statement outlining the reforms, which aim to “reduce execution risk for issuers, lower compliance costs and make it easier for companies to access public markets.”

The reforms “also advance our secondary objective of supporting the competitiveness and growth of U.K. markets — helping companies access capital and giving investors access to a wider range of investment opportunities,” it noted.

Jon Relleen, director of infrastructure and exchanges at the FCA, said, “We want the U.K. market to be an attractive place for companies to raise capital and grow. By making the U.K. listing regime more efficient, we are supporting the growth and competitiveness of U.K. capital markets.”