Pension schemes say London listing reforms will damage City

The UK’s financial regulator’s plans to encourage more companies list their shares in London has sparked a hostile response from British pension schemes. They warned that the proposals will damage the City’s appeal as a global centre of business.

Ten of the UK’s largest pension schemes wrote to the Financial Conduct Authority to warn that the reforms it proposed to the UK listing regime would harm “fundamental investors protections”.

The FCA wants to encourage more companies to come to London, where the number of listings has fallen by 40 per cent since 2008. The FCA wants to encourage more firms to list in London. Since 2008, the number of companies listed in London has decreased by 40%. This is due to increasing competition on exchanges from the US, Europe, and Asia.

The letter was sent to highlight the dangers to shareholders’ rights to vote on important transactions such as a takeover by a related company of a UK listed company.

The 10 pension schemes that oversee £300bn in retirement savings argued that the proposed diluting of shareholder rights will make it harder for institutional investors act as effective managers of their assets.

The FCA’s proposal would eliminate the requirement for companies to provide three years’ worth of audited financial statements and combine London’s premium and standard markets into one category. This would make it easier for companies in their early stages to list. Dual class share structures would give founders of companies greater voting rights than ordinary shareholders.

“We don’t think the proposed changes will resolve the fundamental issues that affect our equity markets. We believe that the proposed changes will only exacerbate the existing challenges and lead to worse outcomes for Railpen’s members, said Michael Marshall.

In the letter, it was stated that the FCA’s plan would “diminish the UK’s reputation” for strong investor protections and high standards of corporate governance.

In a separate reply to the watchdog’s consultation that closed on Wednesday, the Pensions and Lifetime Savings Association (a trade association for workplace pension plans) expressed concern about the reforms.

The proposed rule changes, it argued, “may” not result in more listing while also lowering the standards required of publicly traded companies. It also claimed that the quality of London’s equity market would be diluted by reducing the expectations of the existing listed companies.

The new rules could have the opposite effect of what was hoped, as they may reduce the number of retail and institutional investors who are willing to invest in UK listed companies, said Maria Espadinha. She is a senior adviser at the PLSA.

FCA acknowledged in private that rule changes will require more due diligence from investors and more engagement by shareholders with companies regarding key transactions. The FCA argues that these changes will help bring the UK in line with other jurisdictions, and create more jobs and economic development.

“Any reform to the London Stock Exchange will, of course, attract a variety of opinions. That is why we have an open discussion about the proposals and any shifts in risk appetite that they might entail. The FCA stated that it was looking forward to continuing discussions with investors. The FCA plans to release the revised listing regulations in the fall.