Stock market reforms won’t help London, say investment bankers

THE City watchdog’s plans to slash red tape won’t make Britain’s beleaguered stock market more attractive, investment bankers have warned.

The Financial Conduct Authority’s (FCA) proposals to overhaul the UK’s listing regime will do little to convince companies to float in London, a KPMG survey of senior bankers found.

More important is pay, with executives put off by investor opposition to large remuneration packages.

The FCA last month outlined detailed proposals to simplify the UK’s listing rules in an effort to rival New York. The UK has struggled to attract new companies to its public markets amid a deal-making drought and as several companies already on London’s stock exchange opt to leave. One banker said: “There is a Doom Loop where outflows cause investors to sell more, causing more underperformance.”

KPMG’s report found that bankers were unconvinced that the rule changes would improve London’s attractiveness.

The “big four” accountant surveyed dozens of senior bankers at 23 large US and European investment banks, including Barclays, Deutsche, HSBC, Goldman Sachs and Citi. One said: “Listing rule reform is rather ‘a nice to have’ than anything else.” Aadam Brown at KPMG said: “The general consensus from leaders is that it is helpful, but it’s not going to materially change the issue of fund flows.”

The FCA’s plans include replacing London’s premium and standard listings regime with a “single segment” system. Disclosure rules are also being relaxed to make them less onerous.

KPMG’s report also uncovered con- cerns about the implications of relaxing listing rules, with one respondent saying: “While we want to make the red tape a little easier, we need to be careful that we don’t jeopardise quality.”

Bankers said pay was a bigger issue than red tape, with executives able to earn more if their companies were listed in the US. London Stock

Exchange chief Julia Hoggett has previously said the market was being “hampered” by advisers and asset managers blocking pay deals.

The FCA said: “We have been clear our proposals include a rebalancing of risk. We welcome feedback to make sure that we have the balance right. As we said when we launched the consultation, the listing regime is not the only element, and perhaps not the primary one, in decisions made about when and where to take companies public.”

Elsewhere, the City received a boost yesterday after Kazakhstan’s national airline announced plans to list on the London Stock Exchange. Air Astana said it will press ahead with plans to float in London and Kazakhstan as it rides the post-pandemic rebound in travel.

The flagship carrier, which is owned by UK defence company BAE Systems and Kazakhstan’s sovereign wealth fund, hopes to raise $120m (£94m) from the initial public offering.

Air Astana, the largest carrier in central Asia, has earmarked the funds to increase travel and expand into new areas, including China and the Middle East. The airline first began talks about a London listing in 2018 but pushed back plans after the Covid-19 outbreak and Russia’s invasion of Ukraine.

Meanwhile, London Tunnels, which hopes to turn secret Second World War tunnels into a tourist attraction, yesterday announced plans to float later this month. It has raised £10m in pre-listing funding and hopes to join the LSE’s main market at a valuation of £123m.

Chief executive Angus Murray said: “We envisage them achieving the same iconic status as the London Eye.”