Red Tape Removed? Why the FCA’s shake-up could reshape London IPOs

Last week, (28 April) Nikhil Rathi, CEO of the Financial Conduct Authority, revealed in an interview with the Times a number of proposed changes to the regulations around IPOs, aiming to cut red tape in the City. The proposals are looking to make London a more attractive place for companies to float.

It could be argued that the changes are necessary as the London stock market saw just five new listings in the first quarter of 2025, raising £74.7m in proceeds according to EY. Comparatively, there have been 117 IPO listings on the New York Stock Exchange in 2025, according to Stockanalysis.com. As of May 9, 2025, this is an increase of 72.06% compared with the same timeframe in 2024, which had 68 IPOs by this date.

However the LSE reflects an overall trend. The number of IPOs worldwide decreased by 10% in 2024, falling to 1,215, while the issuance volume shrank by 4% to approximately $121bn (£91bn), according to data from EY. This decline was primarily driven by a slowdown in Asia. In contrast, Europe saw a positive trend. While the total number of IPOs slightly declined to 125, the issuance volume increased by 41% to $19.1bn (£14.4bn).

What are the proposals?

Ed Pipe, partner at RSM UK states that in 2024, the government introduced a new framework called the Public Offers and Admissions to Trading Regulations, to replace the UK Prospectus Regulation.

The framework is designed to enhance the attractiveness of capital markets in the UK and provide greater control for the FCA, given the previous rules had been inherited from the EU. These new rules are expected to be finalised in 2025 and come into effect in 2026, representing major changes to the rules for both IPO requirements and follow-on transactions.

The FCA is specifically targeting any barriers which companies may face when trying to raise capital. The latest proposed changes mean that companies that are already trading on the stock exchange will not need to issue a prospectus outlining their business model and the potential risks they face in order to raise more money from investors, except in a few circumstances.

The consultation on the changes to the prospectus rules suggested companies will be able to raise up to 75% of their value by issuing new shares without producing a prospectus. Previously they were allowed to raise up to 20% before the need to issue a prospectus. It could be argued that this may increase the risk for investors who are looking to get involved with companies who are looking to raise capital but it is inarguable that the process will become easier as a result of the changes. Alongside this, the FCA has already pushed through changes to the listing rules on the LSE, including measures such as removing the need for a shareholder vote on some takeovers.

Will it benefit accountancy firms?

In simple terms, more IPOs should mean more work for accountants. However, these changes could mean that there is less work for accountants as there are less regulations to understand and work through. If the process is easier then there is less need for qualified professionals to guide businesses through it. However, Pipe believes that more IPOs will benefit all stakeholders. “An increase in activity levels should be beneficial for all stakeholders. Simplified rules will still mean a company needs to be properly prepared for a transaction to enable an efficient process, which is where the input of accountants can really add value,” he says. It could mean that some firms will have to reposition their offering to stay relevant but it could offer some firms the opportunity to make changes and give its clients a more streamlined and efficient offering.

Dan Booth, CEO of professional services group Leonard Curtis, suggests that these changes will also make it more attractive for accountancy firms to actually list on the stock market meaning that some smaller firms could follow the likes of KPMG and EY in becoming publicly traded.

“The professional services sector as a whole has experienced some well-deserved attention from private equity and consolidation groups in recent years, which we can expect to continue. Accountancy firms in particular may find a public listing attractive given their strong recurring revenues, and this path is sometimes considered a remedy to the succession puzzle,” he explains.

Will these changes have the desired effect?

According to Pipe the sector is already beginning to see the effects of the changes, stating that RSM is hearing less and less that the regulations in the UK are a barrier to any potential IPO. He also believes that the changes are wide ranging enough and, coupled with changes to the Listing Rules, mark a “significant step forward” in making the LSE competitive and attractive for an IPO.

“Last year’s changes to the Listing Rules and these forthcoming reforms provide a clear direction of travel that the UK is adapting and there is support to energise our capital markets,” he says.

This sentiment is echoed by Booth. He believes that any changes to simplify things can only be a positive but that there is always a fine balance between commerciality and regulation, and a weighting in favour of either at some point will stall progress and growth.

Overall, cutting red tape will be helpful to increase the attractiveness of London for an IPO but it is not a silver bullet guaranteed to work. Pipe states that aside from the rules other initiatives to encourage investment into UK listed businesses, such as proposals to incentivise investment within pension schemes and expanding retail participation, are just as important.