FCA boss pledges to review listing rules to avoid another Arm snub
The chief of the Financial Conduct Authority has pledged to review the UK’s listing rules after several British firms ditched the City and opted for New York listings.
Nikhil Rathi, the head of the FCA, said the City watchdog would consult on replacing the current standard and premium listing segments for shares in commercial companies with a single listing category with one set of requirements.
“This change, coupled with a focus on transparency, would lead to a significant reform of the FCA’s listing rule book,” the regulator said in a statement today.
The pledge came on top of calls for new policies to encourage British firms to list in London and not take flight to New York.
Rathi said that while failure to win the listing of Cambridge chipmaker Arm had “focused minds”, improving the appeal of London had not been a “priority area for public policy for decades”.
Many have blamed the FCA for firms’ decisions to snub London, but Rathi said it was time for a fundamental policy rethink on developing and protecting the UK’s capital markets.
“Rather than simply lamenting these decisions or insisting that a few regulatory levers would change the outcomes, it is important to recognise that [there] has not until now been a fundamental discussion about the entire ecosystem,” he told attendees at the Global Investment Management Summit in London earlier today.
“That lack of system-wide focus has come at a time, when the shape of the global economy – and our share of it – has also changed dramatically,” he added.
Rathi highlighted that the loss of the Arm listing came partly as a result of the Treasury choosing not to force the firm to list in the UK, as other countries have done for companies they have deemed to be ‘strategically important’.
“In the UK we have tended to prioritise free movement of capital cross-border so have not put in place similar requirements,” he said.
“When ARM was taken over in 2016, no post-offer undertakings in relation to retention of a UK capital markets nexus were sought,” he added.
The comments add to Rathi’s ongoing defence of the regulator’s role in the Arm fiasco.
He confirmed to MPs earlier this month that the FCA had considered bending its rules to try and win the listing of the firm.
“In the case of Arm, we were aware and the government indicated to us that this was a company of national importance,” Rathi told MPs. “And therefore we engaged to look at our rules where there was a case for making modifications and where that evidence was presented to us.”