UK Regulator Proposes Easing Audit Rules to Attract Chinese Listings to London

The FRC mulls temporary use of Chinese auditing standards for London-listed firms to boost the UK’s global financial competitiveness and attract new GDR listings.

By: AXL Media

Published: Feb 17, 2026, 11:13 AM EST

Source: Information for this report was sourced from City AM

A Strategic Pivot in Audit Standards for Global Depositary Receipts

The UK’s Financial Reporting Council (FRC) has officially opened a consultation on a temporary amendment to its accounting rulebook that could fundamentally change how Chinese firms access the London market. Under the proposed shift, auditors of Chinese-registered companies seeking to list Global Depositary Receipts (GDRs) in London would be permitted to apply Chinese Standards on Auditing (CSAs) for their UK listing requirements. This marks a departure from the traditional insistence on International Standards on Auditing (ISAs) and is designed to eliminate what the regulator describes as a “perceived barrier” for international issuers.

This regulatory evolution is specifically targeted at the Stock Connect segment of the London Stock Exchange’s International Order Book. By allowing the use of local Chinese standards, the FRC hopes to streamline the listing process for eligible entities currently operating under the Shanghai and Shenzhen Stock Connect agreements. The proposal is characterized as a tactical response to the dwindling number of initial public offerings in the City, which recently hit a three-decade low.

Regulatory and Competitive Landscape

The push for these changes originated from a direct request by the UK government, signaling a broader political ambition to revitalize London’s status as a global financial hub. Prime Minister Keir Starmer’s recent diplomatic efforts, including a visit to Beijing in January 2026, underscore a renewed focus on fostering economic ties with China. Regulators are now balancing the need for rigorous oversight with the competitive necessity of making London an attractive destination compared to rival exchanges in New York, Hong Kong, and Singapore.

Historically, the FRC has maintained that Chinese auditing standards were not fully equivalent to those of the UK, a stance highlighted in a 2021 review. However, the current proposal suggests a shift toward pragmatic flexibility. This move mirrors recent efforts by the Financial Conduct Authority (FCA) to relax other listing rules and increase transparency in share-trading data, all part of a concerted effort to combat perceptions of low liquidity in British public markets.