Press Release: Proportionate Regulation needed for UK Economic Growth
4 October 2021

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The Quoted Companies Alliance (QCA) has responded to several recent policy consultations on behalf of small and mid-sized quoted companies. Small and mid-caps represent over 90% of quoted companies in the UK, which is why it is so important policy makers are aware of their views when considering improvements to UK markets. Their contribution to the UK economy is vast, not only in terms of generating wealth, but also in relation to creating jobs and encouraging innovation and disruption. Their contribution in helping to support the social, economic – and even environmental - issues of our time should not be underestimated.

The QCA has welcomed HM Treasury’s and the FCA’s prompt actions in adopting and taking forward the recommendations made in the Listing Review, including:

HM Treasury’s UK Prospectus Regime Review
The QCA responded to HM Treasury’s UK Prospectus Regime Review which was informed by its Legal Expert Group who examined the proposals and responded from the viewpoint of small and mid-sized quoted companies. For decades, smaller quoted companies have struggled with the disproportionally complex and costly “one-size-fits-all” approach taken by the EU in relation to prospectuses. It is therefore imperative that the UK returns to consideration of the core purpose of the prospectus and the kind of transaction for which it should be required. Overall, the QCA was largely encouraged by the direction of travel taken by HM Treasury, with the consultation being seen as an opportunity to create markets that are fit for the future, particularly following Brexit. Small and mid-caps wish to see the UK deliver a regime which is balanced and proportionate, and recognises the importance of growth companies in the market and to the health of the domestic economy. For more detail, please see the QCA’s UK Prospectus Regime Review response here.

HM Treasury’s Wholesale Markets Review 
The QCA responded to HM Treasury’s Wholesale Markets Review which was informed by its Secondary Markets Expert Group on behalf of small and mid-sized quoted companies. Overall, the consultation was well received and seen as a positive step for the future of UK public equity markets. The QCA’s response stressed the need for liquidity in small and mid-caps - due to the fact that recent policy, regulatory and market developments have increased the barriers for retail access to investment in these companies. Although HM Treasury’s consideration of the creation of a new listing venue for smaller companies might be useful, it is also important to assess some of the issues affecting the broader population of smaller companies and ensuring that listing remains attractive to companies throughout their growth journeys. The essential element of attractiveness of the markets, for current and future public companies, is the presence of capital and a rich ecosystem of varied investors. Focusing on retail access to small and mid-cap equities is a vital step in creating this virtuous ecosystem. For more detail please see the QCA Wholesale Markets Review response here.

FCA’s Primary Markets Effectiveness Review
The QCA responded to the Financial Conduct Authority’s Primary Markets Effectiveness Review, informed by its Primary Markets Expert Group and Board of Directors. The QCA shares the FCA’s objectives of improving the effectiveness of the UK’s primary markets. The QCA highlighted in its response that the regulator must take concerted action to ensure a culture and environment that is conducive to extolling the virtues of UK public equity markets. Fostering a greater long-term culture in public markets and redressing the regulatory imbalance between public and private equity will have the greatest influence on enacting behavioural change and encouraging deeper and more liquid public markets. This can be fulfilled, in part, through the provision of choice by inspiring companies at an earlier stage of their growth to list, allowing investors to gain access to the higher levels of growth that can occur. For more detail, please see the QCA’s Primary Markets Effectiveness Review response here. 

Following a tumultuous year, the QCA and its members believe that the small and mid-cap community have a vital role to play in rebuilding and strengthening the UK economy. They can only do so, however, if they have room to grow within markets that are fit for purpose. Whilst these consultations are a good first step, the Government and FCA need to take bold, concerted action to create inspirational markets fit for the future.

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For further Information please contact:

Ruby Halabi
Communications Executive, The Quoted Companies Alliance
E: ruby.halabi@theqca.com
T: 020 7397 8140

About The QCA
The Quoted Companies Alliance is the independent membership organisation that champions the interests of small to mid-size quoted companies.
There are around 1,250 small and mid-size quoted companies in the UK, representing 93% of all quoted companies. They employ approximately 3 million people, representing 11% of private sector employment in the UK, and contribute over £26bn in annual taxes (source).
Our goal is to create an environment where that potential is fulfilled. We identify the issues that matter to our members, keep them informed and interact to build the understanding and connections that help our members stay ahead. For more information please visit www.theqca.com.