UKEMA responds to Wholesale Markets Review

The UK Equity Markets Association (UKEMA) has called for action to ease the journey of smaller corporates to become publicly listed companies as part of its response to the Wholesale Markets Review.

In its submission, the UKEMA noted that the number of companies admitted to AIM has halved from its peak, while the average market capitalisation of listed firms has doubled, indicating that the public markets are no longer the preferred route to access growth capital for smaller companies, with various regulatory initiatives also having pushed institutional investors away from smaller quoted SMEs.

UKEMA expressed its support for changes to address these trends, including simplifications to initial and continuing disclosure requirements, allowing dual class share structures, removing or reducing free float share requirements and having no minimum market capitalisation of fund raise on admission or Initial Public Offering.

In addition, UKEMA also proposed a review of FCA Rules and Guidance to allow retail access to professional research, with appropriate protections; and a review of the Financial Promotion Order to allow corporates to disseminate research on their own publicly traded securities.

Sunil Dhall, Chair of the UKEMA said: “It is clear that action is needed to make it more attractive and simpler for smaller companies to access public markets for the capital they need to grow. UKEMA is supportive of reforms to refine regulations to increase the effectiveness of UK markets and to encourage greater retail participation.

The UKEMA’s response to the Wholesale Markets Review can be viewed here.

About UKEMA

The UKEMA represents those investment banks and equity brokerage firms that focus on raising capital for SMEs, particularly listed firms.

Its members trade in shares of over 2,000 quoted companies, accounting for 57% of London Stock Exchange turnover by volume in 2021, and produce research on over 1,700 companies, representing 87% of listed issuers.

UKEMA member firms facilitated investment of more than raised £6.7bn in funds for companies in 2021, supporting growth in the real economy, employment, innovation, entrepreneurship and wealth creation.