THE London Stock Exchange’s boss last night called on those involved in the capital raising business to back his campaign against proposed new rules he fears could “severely” impact London’s competitiveness.
There are growing fears that the new rules could chase capital raising out of London, robbing the City of much-needed income and jobs.
Xavier Rolet opposes controversial plans to split the regulation of the primary and secondary capital raising markets between the new Consumer Protection and Markets Authority (CPMA) and a strengthened Financial Reporting Council (FRC). While seemingly obscure, the move will have serious repercussions, critics warn.
Others in the City agree but have so far largely kept their counsel. Yesterday Rolet asked for more critics of the government’s proposals to come forward, for the sake of the City and its ability to raise funds for large and small companies alike.
“I don’t speak for others but I would say that I would not be surprised if a number of other participants issued similar views to ours,” he told City A.M. “I want to encourage them to make their views known. We need a robust response to the consultation.”
The government’s consultation process ends on 18 October. “We don’t have long,” warned Rolet.
Rolet is concerned that separating the regulation of primary listings – those companies that are raising money for the first time – from the regulation of secondary listings makes little sense, since it will make regulation less efficient. But he is most concerned about the consequences of doing this on the UK’s influence in Brussels.
The CPMA has the UK’s only vote on Europe’s new super regulator. Rolet fears that it will not be able to represent the views of the primary listings market there if that area is no longer within its remit. “Given the sheer weight of regulation, you need to have experts in the room who have a detailed understanding of both primary and secondary market issues and are responsible for the outcome,” he said.
Rolet said he was positive the government was consulting on the issue and is hopeful changes can be made.
The Investment Management Association has criticised the changes. It says that separating the regulation of primary and secondary markets could increase risks of market abuse. The Association of British Insurers and the National Association of Pension Funds told City A.M. they were still consulting their members.
For its part, the FRC is refusing to say whether it even wants the new responsibilities. Stephen Haddrill, the chief executive of the FRC, said: “We will make our views known to government when we have completed our own analysis.”