FCA fast tracks consultation on listing rules ahead of Aramco decision

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FCA chief executive Andrew Bailey

The FCA has fast tracked a consultation on proposals to create a new premium listings category for companies controlled by sovereign countries.

The regulator is continuing work on its discussion paper Review of the Effectiveness of Primary Markets, but is bringing forward this particular proposal, while work on the rest of the review continues.

It comes as the UK tries to woo Saudi Arabia to list its state oil group on the London Stock Exchange.

The IPO could value the company at £1trn making it the largest listed company in the world.

It suggests a sovereign controlling shareholder would not be considered a related party for the purposes of the UK listing rules and that controlling shareholder rules would not apply to companies in the new category.

The FCA says it targets companies that may be the subject of major privatisation transactions.

FCA chief executive Andrew Bailey says sovereign buyers are different from private sector individuals or companies in their motivations and nature.

“Regulatory protections for investors lie at the core of the listing regime. However, it is important that these protections remain well-targeted.

“Refining the listing regime in this way would make UK markets more accessible whilst ensuring that the protections afforded by our premium listing regime are focused and proportionate.”

Last month, Royal London Asset Management corporate governance manager Ashley Hamilton Claxton said attempts to bend the listing rules to facilitate the IPO of Aramco are highly inappropriate.

“The rules which regulate the UK’s equity market are designed to ensure the integrity of the London market as a leading global exchange and to protect the interests of minority investors, particularly when there is a large controlling interest in a UK listed firm. These should not be tampered with, no matter how attractive the prize.”

RLAM would lobby against any formal attempts for Aramco to list in the UK, Claxton said.

“If this deal is forced through without adherence to the UK’s listing rules, there is a real danger further listings could emerge where large international firms are able to access UK capital markets without playing by the rules.”