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Rishi Sunak will pave the way for radical reforms in the stock market to attract more fast-growing companies to go public in the UK, amid growing risk to London’s status as a leading financial center after Brexit.
In a development to coincide with the budget on Wednesday, the chancellor will publish the findings of a landmark revision in the UK’s listing rules to boost the UK’s attractiveness as a place for companies to grow and go public.
Led by former EU financial services commissioner Lord Jonathan Hill, the reform could introduce the most important reforms in the City of London in decades.
It comes amid concern in the heart of government that Britain risks losing to international rivals such as Amsterdam, New York and Hong Kong when it comes to hosting stock market debuts for fast-paced tech companies. growth, and as the chancellor and prime minister try to frame the country as a destination for global business after Brexit.
Commissioned by the Chancellor last year to further enhance the UK’s position as an international destination for equity trading, the report proposes more than a dozen reforms designed to make it easier for innovative companies to list in the UK.
Today, the largest companies listed in London are finance companies or more representative of the old economy of mining, energy and natural resources. American tech giant Apple was worth more at one point last summer than the combined value of all the FTSE 100 companies.
Amsterdam surpassed London as Europe’s largest equity trading hub earlier this year and, as experts say, the symbolic blow could be followed by job losses and more business due to Brexit.
Lord Hill told The Guardian that he believed that the strength and depth of London’s financial services industry meant that it would be difficult for competing European cities to topple its status as the continent’s leading center for global finance. However, he said rule changes are still needed to maintain and increase competitiveness after Brexit.
“The worst thing London can do is sit here waiting to see what happens and waiting for Europe to give us the equivalence and everything will be fine in the wash.
“I am not a Singaporean man on the Thames, but the opportunity to establish rules and regulations more quickly, flexibly and proportionally in areas such as sustainable finance and technology, I think there is an opportunity there,” he said.
The review calls for a reorganization of the listing rules to allow for dual-class share structures in the premium segment of the London Stock Exchange, which would give the company’s directors and founders better voting rights.
The changes would make such listings eligible for inclusion in top-of-the-line FTSE indices, which attract a broader pool of investors than the standard segment of the London Stock Exchange.
Other measures include reducing the number of shares a company must sell to the public from 25% to 15%. Steps are also recommended to liberalize the rules regarding special purpose acquisition companies, known as Spacs, which are “blank check” shell companies launched to raise money from investors first and then look for a business to buy later. .
These stock market quotes have become one of the most prominent trends in global finance over the past year, with a host of Spacs floating around in New York and London.
The rule changes are meant to persuade companies like Cazoo, the UK-based online car platform, to consider a listing in London. The company, which could be worth up to £ 5bn when it goes public, has reportedly been considering a merger with New York-listed Spac as an alternative.
Faced with increasing competition from abroad, Hill also recommended that the chancellor produce an annual report to parliament each year on the city’s competitive position.
However, the plan to reform the listing rules could raise concerns that Britain is lowering corporate governance standards in favor of pursuing high-profile trophy quotes, echoing the debate over the group’s $ 2 trillion listing. oil tanker Saudi Aramco.
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Hill said it had recommended safeguards to maintain investor protection, while arguing that there was no point in having a theoretically perfect listing regime if, in practice, users increasingly choose other venues.
“The recommendations in this report are not intended to drive a wedge between us and other global hubs by proposing radical new outlets to try to take advantage of a competitive advantage. It is about closing a gap that has already been opened. All recommendations are consistent with existing practices in other well-regulated financial centers in the US, Asia and Europe, ”he said.
Sunak said the report had provided bold ideas to help improve the UK’s reputation after Brexit. “The review has been more than successful and I am keen that we act quickly to consult on its recommendations, cementing the UK’s reputation as a leader in global financial services,” he said.
