London Stock Exchange chief: FCA rule changes won’t stop the City’s decline on their own
New rule changes designed to boost the appeal of UK capital markets are “just one element” of arresting the City’s decline, the chief of the London Stock Exchange warned today.
London bourse chief Julia Hoggett said that a host of new rule changes revealed by the FCA last night, which include merging the standard and premium segments of the market, were a “meaningful step forward towards ensuring the UK remains a leading global capital market”.
However, she warned that more needed to be done outside of regulatory tweaks to keep London competitive on the international stage.
“We believe this approach strikes the right balance in creating a simplified listing regime for companies whilst giving investors the information they need to make informed investment decisions and creates a level playing field for UK companies competing with international peers,” she said.
“These proposed rule changes are just one element of the reforms needed to improve the competitiveness of the UK’s capital markets.”
Hoggett’s comments came as she called for bosses of listed firms to be paid more to tempt in more top talent and investment in the UK.
In an article on the London Stock Exchange website today, she said the UK should be “encouraging and supporting UK companies to compete for talent on a global basis” so it remains an “attractive place for companies to base themselves, stay and grow”.
The plans from the FCA and Hoggett mark an acceleration of efforts to stop a slump in the standing of the London Stock Exchange as firms snub the City in favour of New York.
Ministers have pushed ahead with a series of reviews in the past three years to try and boost the appeal of London, including the Hill Review of the listings regime and the recently-launched Kent review of corporate research landscape.
However, Hoggett’s warnings point to the wider issues facing London as it looks to tempt more firms to market. She has been at the forefront of calls to unlock more pension cash and boost investment into London’s stock market in recent months.
The Capital Markets Taskforce, headed by Hoggett, recently called on Chancellor Jeremy Hunt to accelerate consolidation of pension funds in order to unlock a wave of investment into the UK’s equity markets.
Speaking with the BBC this morning, FCA chief Nikhil Rathi similarly stressed that rule changes would only go so far in reviving the appeal of London’s markets.
“We [the FCA] are one part of this conversation. There’s a broad ecosystem here involving investors, firms that run market infrastructure advice and, of course, the government is looking at issues in relation to pension funds,” Rathi told the Today Programme.
“All of the bits of the ecosystem need to be working together to make sure we’ve got the right balance between all those different factors to make sure companies can access the market and grow,” he added.
London’s standing has been dealt a series of heavy blows in recent weeks, including the move by chipmaker Arm to opt for a New York-only listing and building supplier CRH’s decision to ditch London for New York.
The FCA announced further plans today to enhance the secondary markets which it said would further “promote competition and growth”.