The Financial Conduct Authority (FCA) has published its proposals for new rules that aim to encourage firms to list in the UK and for the regulatory regime for a bond market consolidated tape.

The consolidated tape is an electronic system that collates bond market data, such as prices and volumes, and disseminates it to investors.

It will look to provide investors with trade and sales data quicker and more cheaply.
Measures to increase the information that is published in real time were outlined, which the FCA said will improve the bond and derivatives markets’ ability to establish a fair price, and help investors buy or sell.

“These proposals will make sure that data that will go into the forthcoming bond consolidated tape is standardised, complete and of high-quality,” the FCA noted.

Furthermore, the FCA hoped that the proposals would help investors hold their brokers accountable and improve competition for their services, and enable market participants to maintain market stability and manage risk.

The authority will outline it next steps for equities in 2024.

Meanwhile, following a consultation, the FCA also published its proposals aimed at making the UK’s listing regime more accessible, effective, and competitive.

It kept the suggested change to a simplified listing regime with a single listing category, aimed at encouraging a greater range of companies to list in the UK.

A disclosure-based regime has been proposed, which the FCA said would put sufficient information in the hands of investors so they can influence company behaviour and decide how they want to invest.

The FCA suggested disclosures for ‘significant’ transactions while keeping sponsor scrutiny of related part transactions, rather than the current mandatory votes, while shareholder approval for key events would remain.

Concerns have been raised about the proposed approach to voting, with Railpen senior investment manager and Investor Coalition for Equal Votes (ICEV) chair, Caroline Escott, stating there was “little sign” that investor concerns about weakening corporate governance standards had been taken into account.

“Disappointingly, this latest consultation has taken a backwards step on a key shareholder right to an equal vote,” she continued.

“Backtracking on mandatory time-based sunset clauses on unequal voting rights is particularly worrying considering recent research from the $2.5trn ICEV, which Railpen chairs.

“The research shows that any benefits accruing to firms from dual-class share structures diminish within a few years after listing. It is therefore not in the interests of companies, investors and their beneficiaries, and capital markets as a whole to maintain dual-class structures over the mid to long term.

“In light of this evidence, we will continue engaging with policymakers and making the case for an evidence-based approach that fully considers the needs of investors, companies and everyday savers alike.”

These concerns were echoed by Hargreaves Lansdown head of trading proposition, Tom Lee: “A successful listings regime which supports our home market is essential. However, making the UK an attractive place to list has to be balanced with rights for shareholders and ensuring that the quality of the market is not diluted.

“We are therefore concerned that the FCA is pushing forward proposals that do not allow for shareholder votes on significant and related party transactions.

“The plans to have no mandatory sunset clause on dual class share structures has the potential to create a permanent two-tier share structure, which is not welcome.”

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