The London Stock Exchange Group LSEG, +0.03% is seeking to blur the line between public and private companies, part of a plan to attract fast growing technology firms to list in the U.K. in the wake of Brexit.
The LSE has proposed the creation of a special market for private companies to trade their shares publicly on the exchange on certain days, according to a person familiar with the matter and proposals from the LSE to its regulators, the Financial Conduct Authority, and the U.K. Treasury, seen by The Wall Street Journal.
Private company shares would trade publicly between one and five days in each trading window, once a month or quarter, or every six months. The companies wouldn’t be subject to the same degree of regulatory oversight as a fully listed company, requirements that startup company founders say are deterrents to listing shares.
“The new venue type would act as a stepping-stone between private and fully public markets,” the LSE wrote in a document it sent to the FCA and the Treasury on Dec. 21. It “should be seen as improving on the current options available to companies seeking to raise capital without imposing regulation that will inhibit growth.”
Startup founders, their employees and early-stage investors would be able to raise cash by selling shares to retail and institutional investors. Large private companies would also be able to access the public market under the proposal. Tech firms such as banking app Revolut , buy now pay later giant Klarna and money transfer startup Wise WISE, +0.06% could have used this route to raise money for their shareholders, the LSE said in the proposal.
An LSE spokesperson said there is “potential for additional routes to market to support the widest range of companies through their funding lifecycle including helping them transition from the private to the public markets and indeed back again.”
The program would require regulatory approval and legislative changes. Spokespeople from the FCA and the U.K Treasury declined to comment.
The proposal comes as the U.K. looks to reshape its financial markets after leaving the European Union in 2021. In November, the U.K. government gave the FCA, its top financial policing organization, a secondary mandate to promote competitiveness in the financial sector in addition to maintaining financial stability and consumer protection.
The LSE has endured a longer-term decline in the number of companies listed on its exchange, with the total amount falling to 1,989 in 2020 from 2,365 five years earlier. Last year saw a moderate reversal, with listed companies rising to 2,017.