The UK is about to simplify itemizing guidelines to prop up London after Brexit


LONDON (Reuters) – The UK will modernize its listing rules to attract higher-growth SPAC companies to London, Treasury Secretary Rishi Sunak said after a government-backed review that the capital was on the decline after Brexit.

FILE PHOTO: Pedestrians pass the London Stock Exchange in London, Britain, Aug. 15, 2017. REUTERS / Neil Hall

The London Stock Exchange has faced tougher competition from NYSE and Nasdaq in New York and Euronext in Amsterdam since the UK left the European Union entirely on December 31st.

In order to keep London globally competitive after Brexit, Sunak commissioned a review of the listing rules last November. It was chaired by former European Commissioner Jonathan Hill and published its recommendations on Wednesday.

“The review has more than delivered and I am keen that we move quickly to the recommendations and cement the UK’s reputation at the forefront of global financial services,” Sunak said in a statement.

The Financial Conduct Authority will publicly consult the proposed changes, although some would require legislation to implement.

The government is under pressure to act – it announced a quick fintech work visa last week – after much of euro stock and swap trading left London for Amsterdam and New York following full Brexit in December.

However, asset managers and corporate executives warn against undermining corporate governance standards by simplifying listing rules.

Hill said: “The composition of the FTSE index highlights another challenge: the top London-listed companies are either financially or more representative of the ‘old economy’ than the companies of the future.

He added that there was a feeling that the financial sector was “on the back foot” due to Brexit and new competition from Amsterdam.

“The recommendations in this report are not about bridging a gap between us and other global centers by suggesting radical new exits for a competitive advantage,” said Hill.

“It’s about filling a gap that has already opened. All recommendations are consistent with existing practices in other well-regulated financial centers in the US, Asia and Europe, ”added Hill.


Two changes aim to bring London in line with New York and other financial centers by allowing founders to list their business while maintaining ultimate control.

Hill recommends allowing two-tier stock structures to give directors and founders more voting rights on certain decisions for five years. According to the principle of “one share, one vote”, this contradicts the principle of private investors. The minimum free float or amount of shares in a company or in public hands would be reduced from 25% to 15%.

Hill also recommends liberalizing the listing rules for special purpose vehicles, or SPACs, whose IPOs in New York have skyrocketed over the past year, with Amsterdam also picking up some lately.

The prospectus used by companies to represent their initial or second offering of stock should also be thoroughly reviewed to make listing a company quicker and easier, Hill recommended.

According to Hill, regulators in Australia, Singapore, Hong Kong, Japan and the EU are aiming to keep their financial sectors competitive and that would also help the UK Financial Regulator.

There should also be an annual report from the Minister of Finance to Parliament on the competitive position of the financial sector.

“The advancement of the UK listing regime is the key to flexibility for companies that want to list in London while maintaining high standards of corporate governance,” said David Schwimmer, CEO of the LSE Group.

Reporting by Huw Jones; Adaptation by David Evans and Louise Heavens