Modernising the listing regime

Ken Rushton, Director of Listing at the FSA, said:

"It is over ten years since the Listing Rules were looked at in a fundamental way. At that time the Listing Authority was part of the London Stock Exchange. Since then the Listing Rules have had many ad hoc additions. We think the time has come for us to review what we want the regime to look like and how it should best be operated. We hope the final result will be a simpler, more streamlined rulebook that provides an appropriate level of regulation plus the flexibility and transparency demanded by those wishing to raise capital on the London markets."

"Our intention to modernise and simplify the Listing Rules comes in the wake of Enron and Worldcom, and at a time when high standards of corporate governance and business integrity have never been more important. As such, the work we are doing now will feed into the wider debate about company law and accounting and auditing standards, as well as the ongoing negotiations on EU directives, such as the Prospectus Directive and the Market Abuse Directive."

The Discussion Paper Review of the Listing Regime published today raises 5 areas of the FSAs Listing Rules which the FSA believes require policy development. The Discussion Paper makes clear that changes to the Listing Rules may not be the only or most appropriate response.

• Corporate governance
  The rules in this area have moved to centre stage following the collapse of Enron and concerns about the independence of non-executive directors.

• Corporate communication
  The FSA intends to review the rules covering disclosure of price sensitive information to the market and the publishing of forward-looking information by companies.

• Shareholders rights and obligations
  The UK is the only European country which provides detailed listing rules to ensure equal treatment for shareholders, for example in relation to major deals. The FSA asks for views on these rules.

• Financial information
  Issues to be considered include the frequency, quality and timeliness of financial reporting and the independence of auditors.

• Sponsors
  The UK has formalised the role of professional adviser to listed companies under the sponsor regime. The FSA asks whether this is effective.

The Review will be carried out by a number of teams comprising FSA staff and market participants overseen by a consultative committee representing stakeholders in the London market. The process is modelled on that used successfully for the recent Review of company law. The FSA is also publishing, as an annex to the Discussion Paper, a report commissioned from PricewaterhouseCoopers entitled Primary market comparative regulation study which compares the UK regime with international counterparts. The report concluded that UK primary market regulation is considered generally to be on a par with the United States and superior in the area of corporate governance.

Notes for editors

1. The FSA has today published a Discussion Paper: Review of the Listing Regime. It invites comments by 15 October 2002.

2. The FSA took over the role of UK Listing Authority from the London Stock Exchange on 1 May 2000.

3. The Listing Rules set out the requirements for admission of securities to listing, and the continuing obligations of companies, such as disclosure to the market of price-sensitive information and details of directors dealings.

4. The timetable for the review is closely linked to the implementation of the Prospectus Directive which is currently expected in June 2004. There will be a series of initial consultation papers on the areas identified, together with a feedback on the Discussion Paper responses by December 2002.

5. The FSA is the principal regulator of the UK financial services industry and has four objectives under the Financial Services and Markets Act 2000: maintaining market confidence; promoting public understanding of the financial system; the protection of consumers; and fighting financial crime.

6. The FSA aims to maintain efficient, orderly and clean financial markets and help retail consumers achieve a fair deal.