UK regulator mulls Chinese auditing change to encourage London listings

(Sharecast News) - The Financial Reporting Council announced on Monday that it is consulting on proposed changes to auditing rules that would allow auditors of London-listed, China-based companies to use Chinese auditing rules. The government believes that current rules create a "perceived barrier" which might put off some Chinese-registered issuers from listing Global Depositary Receipts (GDRs) in London, the FRC said.

It hopes that the temporary amendment to the Third Country Auditor (TCA) policy may support the flow of capital and encourage investment, forming part of a wider government initiative to boost UK economic growth and strengthen London's competitiveness in global financial markets.

"Allowing the use of CSAs on a temporary basis aims to encourage eligible Chinese registered entities to list on the London Stock Exchange through the Shanghai/Shenzhen Stock Connect agreement between the Financial Conduct Authority and the China Securities Regulatory Commission," the FRC said in a statement.

The regulator highlighted that the proposed changes are narrow in scope, time-limited and accompanied by safeguards to uphold invest protection and market integrity.

As part of the official consultation period, the FRC is seeking feedback on whether the proposed changes take into consider appropriate investor protection and audit quality.