The Financial Conduct Authority (FCA) has defended its decision to create a new listing category for companies owned by sovereign states, following complaints by MPs.
The changes, introduced in July, have been interpreted by some as a bid to clear the path for a listing of Saudi Arabia’s state-owned oil company Aramco on the London Stock Exchange.
The proposals to create a new premium listing category for sovereign controlled companies by the FCA come as Aramco weighs up which financial centre to pick for the sale of 5% of its shares. The company could be valued at US$2trn and would generate hundreds of millions of dollars in fees for investment bankers, lawyers and other professional firms involved in stock market flotations.
The FCA’s proposals have been seen in some quarters as helping to ensure the country’s capital markets remain attractive to foreign investment once it leaves the European Union.
But investors and various corporate governance groups and a group of MPs have said a proposed new listing category could lower the quality of companies on the London stock market, and potentially leave shareholders exposed if things went wrong.
Speaking to Reuters, at an industry summit this week, FCA chief executive Andrew Bailey, pictured left, said: “Some of the commentary from some of the people has suggested that the premium listing category is monolithic and therefore we’re compromising the whole premium listing category, which we’re not, because it’s actually a series of categories under the premium listing.”
Quality and integrity concerns
Members of the House of Commons have written to the FCA asking for reassurance that changes to listing regulations would not threaten the quality and integrity of UK governance.
Bailey added that he would be issuing a reply to the letter in due course.