Shrinking London Stock Market Raises Concern As UK Listings Decline Amid US Rivalry

The chief executive of the Financial Conduct Authority (FCA), Nikhil Rathi, has defended Britain’s listing rulebook as criticism mounts over the shrinking London stock market. Speaking to the Commons Treasury Committee, Rathi addressed concerns about businesses increasingly favouring overseas markets, particularly in the United States, for their public listings.

Rathi dismissed claims that the FCA’s eased listing regime, introduced last year to attract more companies to London, was at fault. Instead, he highlighted broader challenges; these included fluctuations in sterling, approaches to executive remuneration, and the formidable scale of the US market compared to the UK.

Fears surrounding London’s stock exchange have intensified following announcements by notable firms to relocate their main listings. The cross-border payments company Wise recently confirmed its decision to move to New York, joining the ranks of Flutter Entertainment, Ferguson, and CRH—all of which have opted for US markets as their primary venues. Such moves underline growing doubts about London’s allure for business.

Additional pressure has stemmed from a spate of takeovers of UK-listed companies by foreign firms. The latest example is the £1.8bn acquisition of Alphawave IP Group, a British semiconductor maker, by the American tech giant Qualcomm. These takeovers, compounded by a lack of new flotations, paint a stark picture of declining confidence in the UK’s markets.

Rathi emphasised that low allocations to UK equities by British pension funds were a significant factor depressing company valuations. He suggested that a broader debate is needed to address whether UK companies have become undervalued, making them prime targets for acquisition by international buyers.

As regulators scramble to tackle these challenges, the FCA has also announced the appointment of Sarah Pritchard as deputy chief executive. This newly created role is part of the regulator’s effort to manage its expanding responsibilities, which now include oversight of cryptocurrency markets and payment systems.

The broader question remains whether the UK market can adapt swiftly enough to halt this exodus of businesses and reignite its appeal to companies and investors alike.