Policy paper

UK Listings Review: Government response

Updated 21 April 2021

This was published under the 2019 to 2022 Johnson Conservative government

Statement made by : Rishi Sunak, The Chancellor of the Exchequer

Statement

In November last year, I asked Lord Hill of Oareford CBE to carry out an independent review of the UK’s listing arrangements. Strong public markets are a vital component of the UK economy and the Government is committed to ensuring that the UK’s markets are as competitive as possible, and to supporting the many different companies that use markets to raise capital, including technology firms as mentioned in Lord Hill’s report.

At Budget last month, Lord Hill published his UK Listing Review^{[footnote 1]}.It made fourteen recommendations. Today, I am pleased to set out how the Government intends to take forward each of the recommendations made.

Seven of the recommendations are directed towards the Financial Conduct Authority (FCA), our independent regulator. As the FCA set out in its public response on 03 March, it welcomes the report and intends to consider all the relevant recommendations carefully, including on free float, dual class share structures, and special purpose acquisition companies (SPACs). It has committed to acting quickly where appropriate, including by publishing a consultation by the summer, and a specific consultation on SPACs before that.

Six key recommendations are directed towards HM Treasury (HMT), and I outline how we will be taking forward each recommendation, in turn, below.

Firstly, I agree to present an annual ‘State of the City’ report to Parliament (recommendation 1). I am grateful for the suggestions provided as to what this report could cover, and I believe this would benefit the UK’s capital markets. I will present the first of these reports in 2022.

Lord Hill recommended that HMT considers an additional ‘growth’ or ‘competitiveness’ objective for the FCA, as part of the Future Regulatory Framework (FRF) Review (recommendation 2). The first consultation on the FRF review closed on 19 February. This review seeks to ensure the UK’s regulatory framework is fit for our future outside the EU and the first consultation welcomed stakeholder views on the current set of statutory objectives. It also sought views on the future overall accountability framework for the FCA (and PRA). The Government is currently considering the 120 stakeholder responses received in relation to this consultation and will use these to inform a second consultation later this year. I will carefully consider this recommendation as part of that process.

Three of the recommendations, on reviewing the UK’s prospectus regime (recommendation 7), considering whether prospectuses drawn up under other jurisdictions’ rules can be used to facilitate secondary listings in the UK (recommendation 8) and facilitating the provision of forward-looking information by issuers in prospectuses (recommendation 9), all deal with the UK’s prospectus regime. Again, I strongly welcome this, and agree we need to consider reforms to ensure these documents are fit for purpose. I can confirm that the Government will bring forward a public consultation on the UK’s prospectus regime later this year.

Lord Hill also raised the issue of improving the efficiency of further capital raising by listed companies (recommendation 13). This is a highly technical area, and I agree that bringing together expertise specifically on this issue will be helpful to consider what more can be done to improve capital raising processes and I am happy to help convene such a group. My officials will be considering what form this will take over the coming weeks.

One of the recommendations, concerning how technology can be used to improve retail investor involvement in corporate actions and their undertaking of an appropriate stewardship role, is directed towards the Department for Business, Energy and Industrial Strategy (BEIS). As such, this recommendation will be taken forward by BEIS as part of its wider consideration of the findings from the Law Commission’s recent scoping study on intermediated securities. BEIS expects to announce a response to the study later this year.

Finally, Lord Hill concluded by drawing the Government’s attention to other issues raised with the review illustrating how the wider financial ecosystem may impact UK listings. I would like to thank Lord Hill for bringing these issues to my attention.

I would like to conclude by again thanking Lord Hill for his work, and I look forward to taking forward his recommendations.

1. https://www.gov.uk/government/publications/uk-listings-review ↩