The World Federation of Exchanges, the global industry association for exchanges and CCPs, has published a paper introducing its Listing Stringency Index (LSI), a standardised framework that can be used to analyse the relative stringency of listing regimes and make informed decisions.

This unique, survey-based composite measure, developed using data from WFE members, quantifies and compares IPO listing requirements across nine regulatory dimensions. It captures cross-jurisdictional differences and directional regulatory changes, documenting where listing requirements have been tightened or relaxed - particularly in response to ESG-related developments and SME access priorities. 

The index was developed by Dr Ishak Demir, Dr Erfan Ghofrani and Dr Ying Liu, Economists at the WFE, who found that:

• The average LSI score across all exchanges is 58.67, with scores ranging from 33.33 to 88.89, where higher scores reflect more stringent IPO listing requirements, suggesting most exchanges adopt a moderately comprehensive regulatory framework.
• IPO fees (92.5%) and disclosure requirements (81.25%) are the most widely enforced dimensions, while financial (31.25%) and voting rights (25%) are the least commonly applied, reflecting a preference for issuer flexibility in early-stage or high-growth markets.
• Exchanges in advanced economies tend to score higher in governance and regulatory approvals, while emerging markets and developing economies often emphasise operational criteria or tax incentives to attract listings.
• 20 exchanges have implemented more stringent rules over the past 15 years, specifically in ESG disclosure and corporate governance, while 7 exchanges have relaxed regulations, mainly by reducing minimum share price and free float requirements.

The cross-exchange analysis of the relationship between the LSI and IPO activity found that: 

• More stringent listing requirements tend to attract larger IPOs - likely because only more established firms can meet higher regulatory thresholds - they do not significantly impact IPO frequency. This suggests that stricter listing regimes shape who lists rather than how many firms list, favouring larger and more established issuers. 
• Conversely, relaxing listing requirements sees increases in both IPO participation and offering size. This suggests that lowering regulatory barriers, such as minimum share price or free float requirements, can directly expand access to public markets and support larger offerings - enhancing both the inclusivity and depth of capital formation.

Nandini Sukumar, CEO of the World Federation of Exchanges, said, “The LSI enables benchmarking and comparative insights to support informed policy dialogue that can enhance inclusivity. By allowing stakeholders to examine how different jurisdictions emphasise accessibility versus investor safeguards, the index helps identify potential regulatory balancing points and supports reflection on how frameworks evolve in response to global trends.”

Dr Pedro Gurrola-Perez, Head of Research at the World Federation of Exchanges, said, “Our findings reveal substantial cross-jurisdictional variation in how market entry is regulated, with particularly wide differences in voting rights, financial criteria, and corporate governance rules. With the comparative analysis it allows, the LSI fosters greater transparency, cross-border investment, and regulatory cooperation, while respecting local market conditions.”

Read the full paper here.