The Investment Association (IA) has warned against exceptions to rules that require firms to list at least 25 per cent of their shares to be included in the FTSE index.
Under current rules, the Financial Conduct Authority can make an exception to this rule.
In a response to the FCA’s consultation on “how the UK equity IPO process can be improved”, IA boss Chris Cummings said that 25 per cent should be the minimum free float level “irrespective of the size of the company being listed”.
Cummings said: "Improving the efficiency of the IPO process is one of the ways in which this can be achieved. However, many see good governance and liquidity as critical elements to the whole process. We would therefore like to reiterate our members’ view that 25 per cent should be the minimum free float level for any premium listed company in the UK, irrespective of the size of the company being listed.
"This should be preserved at all costs to protect the integrity and standard of the UK premium listing," the IA added.
The association's view comes as Saudi Aramco is considering floating five per cent of the company on the London Stock Exchange in what is being touted as the world's biggest stock market listing.
Last month, Reuters reported that the London Stock Exchange is working on a "new model that would allow it to avoid the most onerous corporate governance requirements of a primary listing".
Changing the rules will likely result in the London Stock Exchange drawing criticism over relaxing corporate governance rules to attract state-backed companies.