The United Kingdom’s capital markets are governed by an integrated framework of primary legislation, secondary regulations, and regulatory rules designed to ensure market integrity, investor protection, and orderly capital raising. The regime addresses the admission of securities to trading, ongoing issuer obligations, prohibitions on market abuse, takeover procedures, and the enforcement of standards through administrative and criminal measures.
Regulatory Authorities
The FCA acts as the primary conduct regulator, overseeing listed issuers, investment firms, and trading venues, ensuring disclosure standards, market integrity, and investor protection. The Prudential Regulation Authority (PRA)—part of the Bank of England—focuses on the financial soundness of banks, insurers, and certain systemically important investment firms. The Bank of England itself plays a macroprudential role, monitoring systemic risks and overseeing financial market infrastructure such as clearing houses.
The Panel on Takeovers and Mergers enforces the Takeover Code, ensuring fair treatment of shareholders during mergers and acquisitions. The London Stock Exchange (LSE), operating the Main Market and Alternative Investment Market (AIM), sets its own admission and trading rules in addition to statutory requirements
Key Legislation
At the core of the UK’s system is the Financial Services and Markets Act 2000 (FSMA), which establishes the statutory foundation for regulating financial services and markets. FSMA sets out the authorisation requirements for firms engaging in regulated activities, contains the statutory prohibitions on market abuse, imposes disclosure and transparency obligations, and grants extensive supervisory and enforcement powers to the Financial Conduct Authority (FCA).
The Companies Act 2006 complements FSMA by setting corporate governance standards, codifying directors’ duties, establishing shareholder rights, and imposing company reporting requirements. For securities issuance, the UK Prospectus Regulation—retained from EU law—specifies when a prospectus must be prepared for a public offer and prescribes detailed content standards to ensure that documents are complete, accurate, and not misleading.
Market integrity is further protected by the UK Market Abuse Regulation (MAR), which prohibits insider dealing and market manipulation and requires issuers to disclose inside information promptly, subject to limited lawful delays. The UK Listing Rules, together with the Disclosure Guidance and Transparency Rules (DTRs), set conditions for listing securities on UK markets and continuing obligations for issuers, including periodic financial reporting and corporate governance provisions.
Other important instruments include the City Code on Takeovers and Mergers (Takeover Code), which regulates takeover bids for UK-listed companies, and the Money Laundering Regulations 2017, which impose anti-money laundering (AML) and know-your-customer (KYC) obligations on market participants.