Will Listing Rule Reform Deliver Strong Public Markets for the UK?

Abstract

There is a general consensus that the UK needs strong public markets. To help to ensure that Britain is well-positioned on this front, the Financial Conduct Authority reformed the London Stock Exchange’s listing regime in 2021 to foster initial public offerings (IPOs). This paper outlines and evaluates these IPO-related reforms, assessing in so doing their potential to resuscitate the UK’s public equity markets. The paper puts the IPO-related reforms into context by considering whether the fostering of strong equity markets is a sensible policy goal and by assessing what law can contribute to this endeavour. With respect to the specific IPO reforms, the paper acknowledges they may increase IPO activity but maintains concerns about strong public markets will continue to exist. This is because the reforms do nothing to address exits from the stock market or concerns about ‘over’-regulation of public companies that discourage reliance on equity markets.

Keywords: public companies, initial public offerings, stock exchange regulation, dual class stock, special purpose acquisition companies (SPACs), London Stock Exchange, Financial Conduct Authority

JEL Classification: G34, G38, K22, M13