Concerns Over Potential Weakening of UK Listing Rules
The influential collective owners of UK shares have voiced their apprehension regarding potential changes to the London Stock Exchange’s listing rules. The Local Authority Pension Fund Forum (LAPFF), which holds a substantial £350 billion in UK local authority pensions, has expressed its disquiet in a letter addressed to the chair of the London Stock Exchange Group (LSEG).
At the heart of the debate is the Capital Markets Industry Taskforce (CMIT), led by LSE plc CEO Julia Hoggett. The CMIT has been critical of proposals to fortify the UK’s corporate governance code, leading to many reforms being abandoned. This move comes as part of a broader government initiative to enhance the UK’s competitive edge post-Brexit. However, the LAPFF has challenged the task force’s stance, questioning the evidence behind its recommendations and highlighting a concerning lack of representation from asset owners.
Moreover, the Financial Conduct Authority is on the cusp of implementing a significant overhaul of listing rules. The LAPFF’s letter, penned by Chair Doug McMurdo, warns against a relaxation of these rules based on unproven assertions that such measures would counteract the loss of listings to markets like the USA.
Previous warnings have also emerged from other pension funds, including Railpen, regarding proposals that could undermine shareholder rights. Notable departures from the London market to New York, such as CRH and Flutter Entertainment, as well as ARM’s decision to list in New York despite UK government efforts, underscore the issue’s urgency.
Despite these concerns, McMurdo points out that the decline in public companies is not unique to the UK, citing examples where companies have favored UK listings and noting instances where poor auditing has led to insolvency and delisting.
The LAPFF maintains that robust governance standards and listing rules are vital for safeguarding investor interests and the UK economy’s health. They urge LSEG to disclose any evidence linking stringent listing rules to a reduction in listings or investment. As shareholders themselves, with a significant stake in LSEG, the collective owners’ perspective carries considerable weight in this ongoing debate.
LSEG has yet to comment on the letter, and CMIT has not responded to requests for comment. The situation remains a focal point for those invested in the integrity and future of the UK’s financial markets.
