London Stock Exchange proposes special listings for private companies

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London Stock Exchange Group LSEG,
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Trying to blur the line between public and private companies is part of a plan to attract fast-growing technology firms to list in the UK in the wake of Brexit.

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The LSE has proposed the creation of a special market for private companies to publicly trade their shares on the exchange within a few days, according to a person familiar with the matter and proposals from the LSE to its regulators, the Financial Conduct Authority and the UK. According to. Treasury as seen by The Wall Street Journal.

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Private company shares will trade publicly in each trading window between one and five days, once a month or quarter, or every six months. The companies will not be subject to the same regulatory oversight as a fully listed company, requirements that the startup company’s founders say is a deterrent to listing shares.

“The new venue type will act as a stepping-stone between the private and fully public markets,” the LSE wrote in a document sent to the FCA and the Treasury on December 21. It “should be seen as an improvement on existing options” available to companies seeking to raise capital without enforcing regulation that hinders growth.

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Startup founders, their employees and early stage investors will be able to raise cash by selling shares to retail and institutional investors. Under the proposal, large private companies will also be able to access the public market. Tech firms like banking app Revolut, buy now pay letter giant Klarna and money transfer startup Wise WISE,
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LSE said in the proposal that it could have used this route to raise funds for its shareholders.

An LSE spokesperson said that “additional avenues are likely to support a wider range of companies through their funding life cycle, including helping them transition from the private to public markets and actually coming back again.”

The program will require regulatory approval and legislative changes. Spokesmen for the FCA and UK Treasury declined to comment.

The proposal comes as the UK seeks to reshape its financial markets after leaving the EU in 2021. In November, the UK government gave the FCA, its apex financial policing organisation, a secondary mandate. Promote competition in the financial sector In addition to maintaining financial stability and consumer protection.

The LSE has faced a long-term decline in the number of companies listed on its exchange, with the total amount falling to 1,989 in 2020 from 2,365 five years ago. Last year saw a moderate reversal, with listed companies rising to 20177.

An expanded version of this story appears on WSJ.com,

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