With promising companies either leaving London or deciding not to list here in the first place, this week’s reforms to the UK’s stock market regime could not come soon enough.
Despite intense government lobbying, Cambridge-based software design company Arm recently confirmed its intention to list on the Nasdaq. In March, Irish-based CRH, the world’s largest building materials company, announced its plans to move its primary listing from London in favour of New York. It follows in the steps of Ferguson, formerly Wolseley, the plumbing and heating products distributor, which did the same in May last year. Meanwhile, last month, Flutter, the owner of Paddy Power and Betfair, announced it plans to pursue a secondary listing in New York.
There is a fear that this list of companies may grow further still. On top of this, private equity has shown a renewed interest in UK plc. There have been nine take-private approaches so far this year compared with one in the same period last year, according to Refinitiv. The LSE is facing threats wherever it turns.
Since 2008, the number of listed companies in London has fallen by 40%
It’s in that context that the Financial Conduct Authority, the UK’s financial regulator, has come up with a package of reforms to bolster London’s status. Although some media reports have led with how the changes will ‘pass greater risk to investors’, a fairer characterisation of the whole package is that it’s a bold but appropriate set of changes to help a flagging part of the financial services industry keep up with intense global competition.
As the examples above indicate, New York remains our primary competitor, but all exchanges globally are upping their game, both in Europe and across the Middle East and Asia. It therefore makes sense for the UK to habitually review both its listing regime and the wider financial regulation environment to make sure we’re doing things as well as possible.
