Innovate Finance, the industry body representing the FinTech community in the UK, has submitted a consultation response to the FCA on changing the UK listing rules.

The FCA Consultation Paper titled ‘Primary Markets Effectiveness Review’ aims to change the UK listing rules and create a more attractive environment for companies to IPO in the UK and align it with other overseas markets.

Innovate Finance has been a strong advocate of improving the UK listing rules to create a more attractive environment for UK Fintechs to IPO in the UK.

The proposed changes would be beneficial to the FinTech sector, with qualifications that some of the proposals could go further in order to be more comparable and competitive with overseas markets without compromising market integrity or investor protection.

The three key proposals Innovate Finance is backing to advance the FinTech sector are:

• Dual class shares: the FCA is proposing a more permissive approach to dual class share structures. Innovate Finance supports this proposal, but we’re arguing against a fixed term in the rules, allowing the market to negotiate case-by-case.
• Merging Premium and Standard listing segments into a single listing regime.
• Removal of shareholder votes and circulars for significant transactions and related-party transactions.

Innovate Finance supports the plan to make it easier for founders to keep control of their companies through US-style “golden shares” for a period of up to 10 years. A non-prescribed sunset however would be preferable as it is already the case in the US.

Janine Hirt, CEO of Innovate Finance, said: “Innovate Finance welcomes the FCA’s proposals to make the UK a more competitive listing venue. FinTechs are large users of capital markets, FinTech being the largest UK sector for VC investment and half of the UK’s unicorns to date are FinTechs. An active and robust IPO market is essential to the capital markets ecosystem for FinTech firms, playing a crucial role in their overall success. Innovate Finance members have been vocal about their desire to see the UK as the IPO venue of choice and these proposals are a further step in that direction”.

There has been a decline in UK listed equity markets over the last 10 years compared to Asian and US markets, due in part to the emergence of the high growth listed Tech sector in the US. According to the UK Listing Review, the number of listed companies in the UK has fallen by about 40% from a recent peak in 2008.

Innovate Finance Consultation Response is available here.

The FCA Consultation Paper CP23/10 Primary Markets Effectiveness Review is available here.

Source: Innovate Finance

AFME and @UKFtweets have jointly responded to @TheFCA's CP 23/10 Primary Markets Effectiveness Review: Feedback to DP 22/2 and proposed equity listing rule reforms, with the support of @LinklatersLLP.

Read the full response here: https://t.co/FdHMDK1yzP pic.twitter.com/ayPb8gJhbE

— AFME (@AFME_EU) July 3, 2023