The chief of the London Stock Exchange has hit out at a group of top pension funds today after they warned that reforms to boost the appeal of London risked “watering down” investor protections.
Ten of the UK’s top pension funds managing some £300bn in assets wrote to the City watchdog, the Financial Conduct Authority, yesterday warning that its reforms to the listing regime could hurt investors.
However, speaking at the CityUK conference today, the chief of the London Stock Exchange Julia Hoggett hit back at the calls and said pension funds had not piled similar pressure on other markets.
“The vast majority of those institutions saying ‘we don’t want to change’, direct more of their pensioners’ money into companies listed overseas that have exactly the same rules that the FCA is trying to move to, than they do into UK companies. So their actual money isn’t making that point,” Hoggett said.
“I think that’s one of the things we have to be quite open about and say the simple reality is, we need to make sure that we have a level playing field for companies to choose where they want to get access to their capital.”
The attack comes after the FCA proposed a slew of reforms to the UK’s listing rules in May to try and ease the burden of red tape on firms listed in London.
Among the measures tabled by the FCA were plans to remove mandatory shareholder votes on deals in order to “reduce friction to companies pursuing their business strategies”.
The pension schemes said they “do not think the FCA’s proposed reforms to the UK listings regime will lead to the healthy capital markets we all want” and instead risked “watering down protections”.
The regulator and Hoggett are looking to revive the appeal of London as a listings hub and stop the flow of firms towards New York amid a drought in fresh UK listings. Cash raised via IPOs in London plunged 80 per cent in the first quarter of the year, according to fresh data from EY.
Hoggett has pointed to a plunge in the equity holdings of pension funds as a key driver of the decline in London’s equity market.
A report authored for her Capital markets Industry Taskforce by think tank New Financial found that just four per cent of the UK stock market is now held by pension funds – down from 39 per cent in 2000.