The aim of the listing rules review is to simplify and modernise the existing UKlisting rules to ensure that it provides an appropriate level of regulation, while retaining and strengthening the many features which have contributed to the integrity and competitiveness of UK markets.The FSA is consulting on a restructured set of rules and guidance to:

• simplify and modernise the Listing Rules;
• implement the Prospectus Directive;
• ensure that the UK offers an appropriate regime for regulating securities as well as the flexibility and transparency needed by those wishing to raise capital on the London markets, while providing sufficient protection for investors; and
• ensure that the legal and regulatory environment continues to meet its regulatory objectives.

The feedback received in response to CP 203 supported the FSA's general approach to listing and regulation of the primary securities markets.

In light of industry comments regarding the 'gold-plating' of directives and to reflect concerns regarding competitiveness, the FSA proposes to remove all super-equivalent regulation which currently applies to the debt and secondary listed markets. The market has not requested super-equivalence in these areas and the directives provide an acceptable level of regulation for these securities.

However a significant majority of respondents supported 'gold-plating' the eligibility requirements for primary listed issuers of shares, imposing higher standards than those required by the European Directives. The FSA proposes to retain certain of these provisions which include the eligibility criteria requiring a three year track record and a 'clean' working capital statement.

The Financial Times reported today that what the above jargon meant was that the FSA had dropped plans to lower the standards of information required of listed companies after support for the existing rules from investor institutions. The rules for debt issues will be reduced.  Some of the graphics on the website http://www.metaphorbusinessgraphics.com will assist in simplifying the concepts and jargon associated with financial regulation and reporting.

The FSA intends to bring in a new set of listing principles designed to ensure that issuers act in accordance with the spirit as well as the letter of the rules.

The key proposals for changes in the listing rules include :

• Listing Principles - revised listing principles which will be enforceable as FSA Rules designed to ensure the spirit as well as the letter of the rules is followed;

• Sponsor Regime - retaining the requirement for sponsors for certain transactions, clarifying the role and obligations of sponsors, toughening up the supervision of sponsors and strengthening enforcement against sponsors who fall short of the standards expected;

• Eligibility - retaining the super-equivalent eligibility requirements, such as the requirement for a 3 year revenue earning track record and a 'clean' working capital statement;

• Continuing Obligations - retaining the super-equivalent continuing obligations requirements, such as class tests and the related party requirements:

• Financial Information - adopting a more flexible approach to the presentation of financial information produced outside the ambit of the Prospectus Directive;

• Model Code - streamlining the Model Code and extending it to persons discharging managerial responsibility;

• Debt and Specialist Securities - aligning the requirements for debt securities with those of the directives and establishing a listing particulars regime for issuers of Specialist Securities to provide flexibility in the presentation of historical financial information;

• Overseas Issuers - bringing the rules for overseas primary listed issuers more closely into line with those for domestic issuers while acknowledging that there are some areas where it is inappropriate for overseas primary listed issuers to comply in full with domestic rules; and

• Re-structuring the rule book to reflect our wider role in the regulation of primary securities markets under the directives. The rules will clearly and separately identify rules derived from the directives while also allowing issuers of different securities types to clearly identify the rules applicable to them.