By Charlie Conchie
City watchdogs are at risk of “watering down” standards in London as the government throws its weight behind a slew of reforms to the UK’s listings regime and capital markets, FTSE bosses have warned.
Ministers have been driving ahead with efforts to strip away red tape in the City and last week backed a number of new measures including slimming down the paperwork required from firms before they float.
Regulators have also been scrambling to streamline the listing regime amid fears of an exodus of companies away from the capital towards New York. The Financial Conduct Authority revealed plans in May to merge the two tier structure of the market, which has been blamed by some for deterring firms from listing.
However, a new survey of 150 of the country’s top executives at FTSE listed firms by investment bank Numis today suggests nerves are spreading through the City at the scale of the reform.
Some 95 per cent of chiefs said the “comprehensive regulation” of London’s stock market was its main selling point amid the turmoil of the past 12 months and the same number said they were concerned about the “watering down” of the LSE’s listing rules and standards.
Any sweeping reform may have an impact on tarnishing London’s reputation, executives said, and some 64 per cent of those said they were “very concerned” about potentially watering down the rules.
The FCA closed its initial consultation on reform at the end of June and is currently weighing up its next move.
A spokesperson for the watchdog told City A.M. its focus was trained on attracting “a diverse range of companies to list in and grow in the UK”.
“That’s why we’re consulting on streamlining UK listing rules to bolster UK competitiveness, while maintaining high standards,” the spokesperson said. “We will continue to engage with issuers, investors and advisers as we progress the reforms.”
The survey also found that 90 per cent of FTSE leaders at UK-listed companies expect London’s competitiveness to rise over the next three years, while 99 per cent roundly welcomed the idea of merging the two segments of the market.
Ross Mitchinson, co-CEO of Numis, told City A.M. that he backed the FCA’s ongoing listing and prospectus rule reforms to create a “simpler, more flexible rule book in the UK”.
Red tape surrounding the Capital’s listing market has become a hot button issue in the Square Mile in recent months amid a drought in fresh IPOs. Cash raised via new floats plummeted some 80 per cent in the first quarter of the year, faster than the global average decline of around 60 per cent.
Onerous rules have also been blamed in part for the loss of some of the most high profile IPOs this year. The FCA came under fire after British chipmaker Arm announced it would float in New York despite an aggressive lobbying campaign from ministers.
