London proposes two-tier stock listings regime

LONDON, Dec 1 (Reuters) - Britain's financial markets regulator on Monday proposed a two-tier regime for listing companies to help protect London's reputation.

The Financial Services Authority (FSA) said it envisaged premium listings, which will have to meet higher criteria, and standard listings.

"Labelling the UK's listing regime clearly will provide greater transparency about issuers to investors and other market participants and ensure that London remains a major competitor as global markets evolve," said Sally Dewar, managing director of wholesale and institutional markets at the FSA.

The FSA launched a discussion paper on the listing system in mid-January "to maintain appropriate levels of investor protection and ensure that the listing regime continues to support the capital raising process".

Premium listings will be open to both British and overseas companies that meet extra criteria, such as offering shareholders a vote on large transactions.

Standard listings will cover global depository receipts (GDRs) and debt and securitised derivatives which are only required to comply with European Union minimum requirements.

The watchdog will consult on the changes and aims to provide feedback next summer.

According to recent research by McKinsey & Company, companies in emerging markets have succeeded in issuing large amounts of new equity through cross listings in UK or U.S. equity markets on the back of more stringent corporate governance requirements and stock market regulations.

Cross-listed shares for these companies accounted for as much as one third of their total trading volume.

But companies from developed economies with well-functioning, globalized capital markets have little to gain from cross-listings while involving extra service costs. (Reporting by Daisy Ku; Editing by David Cowell)