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AvaTrade comments on new rules for London stock market

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For the first time in 30 years, London’s stock market rules are being revamped.  As the Financial Conduct Authority (FCA) announces new rules to make the procedures more ‘straightforward’ for companies who are looking to list on the UK stock market, we ask Kate Leaman, Chief Market Analyst at AvaTrade what impact can we expect to see on shareholders, and how useful will the new rules prove in terms of attracting high-quality companies to list in the UK.

“The change of London’s stock market rules aims to make the UK a more enticing place for businesses to list their shares.  The new rules that came into effect on 29 July 2024 will allow companies to make more decisions without needing shareholder votes, simplifying the listing process.”
 
“For shareholders, this means companies will have further freedom in their decision-making.  However, big moves such as takeovers will still require shareholder approval, these stakeholders maintain a level of control.  What’s more, the introduction of a dual share structure, where founders get stronger voting rights, is aimed at attracting more tech startups to choose London over other markets.”
 
“In fact, while these changes decrease some of the mandatory reporting requirements, they also apply further pressure on companies to be transparent as well as disciplined with their finances.  Though investors may be concerned about the increased risk, the hope is that these reforms will improve growth and drive competition in the UK market.”
 
“However, to attract high-quality companies to list in the UK and restore market competitiveness, these changes alone are not enough.  Additional factors such as improved research incentives, enhanced policies that are focused on drawing global talent, and a tax system that supports employee stock options will all play a crucial role in making London a top choice for businesses looking to go public.”