By Huw Jones
LONDON – Britain has launched a review into speeding up how listed companies can raise funds on stock markets, its latest move to keep London at the forefront of global financial centres after Brexit.
Britain’s markets raised 30 billion pounds ($41 billion) in new equity last year as companies sought to shore up their finances during the pandemic, but most businesses chose to raise funds through faster private placings with a small group of institutions, rather than using the stock market.
The review will look at how technology could ensure shareholders get information faster and reduce the period during which they exercise their rights.
“The opportunity exists to facilitate a quicker and more efficient process of raising capital for existing listed companies and more easily to involve retail investors,” said Mark Austin, a lawyer at Freshfields law firm who will chair the review for the finance ministry.
Britain has already completed a review of the primary listings market and regulators are expected to finalise rules making it easier for companies to float and help London compete better in tech listings with New York.
The primary listings review by former European Commissioner Jonathan Hill recommended the secondary capital market could be improved by re-establishing the 2008 Rights Issue Review group.
That group of Bank of England, regulators and industry representatives had recommended investigating more accelerated rights issue models, including those used in Australia, but the suggestion was never taken forward.
Hill said that since 2008 financial markets had been transformed by technological innovation that would allow alternative or additional measures to be taken to improve secondary capital raising.
Austin will look at Australia’s use of “cleansing” notices which update the market on new corporate information to avoid having to issue a prospectus, a time-consuming and expensive undertaking.
Austin will make recommendations to the government in Spring 2022.
($1 = 0.7350 pounds)