* FSA proposes tougher rules for reverse takeovers
* Tighter requirements for main market listings
LONDON, Oct 1 (Reuters) - Britain's financial regulator will set out on Tuesday stricter rules for reverse takeovers and tighter requirements for stock market listings as part of a broader drive to protect investors.
The United Kingdom Listing Authority, which operates under the Financial Services Authority (FSA), plans to outline proposals to change British listing rules following a consultation launched in January this year.
The regulatory changes come days after Bumi , an Indonesian coal venture that was subjected to a reverse takeover and listed on the London Stock Exchange , launched an inquiry into potential irregularities in more than $500 million of funds.
The use of reverse takeovers - where a private company takes over a public one in order to bypass the complex and lengthy listing process - to fast-track London Stock Exchange listings for companies based in emerging markets has been criticised for posing risks to shareholders, particularly those investing passively through funds tracking key indices.
The Financial Services Authority (FSA) said in January the new rules outlined in a consultation paper would help clamp down on such practices.
"The proposed changes will ensure that reverse takeovers cannot be used as a 'back-door' route to listing for companies that would otherwise be ineligible," the FSA said in a statement at the time.
The FSA reforms follows a similar step to increase investor protection taken in December by the FTSE Group, which runs the blue-chip FTSE 100 index.
The FTSE Group said it was tightening rules governing entry to its indices in order to protect minority investors and stop companies with poor corporate governance from exploiting loopholes.
FTSE said companies which want to be included in its UK indices -- including the FTSE 100 -- must ensure at least 25 percent of their shares are freely tradeable.
(Reporting by Luke Jeffs; Editing by Louise Heavens)
Keywords: FSA LISTINGRULES