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By Huw Jones
LONDON, March 8 (Reuters) – The decision by UK chip designer Arm to only list in New York shows a “holistic effort” is needed to reverse the decline in Britain’s share of global company listings, Ashley Alder, chair of the Financial Conduct Authority (FCA), said on Wednesday.
Arm, owned by Japan’s SoftBank Group Corp, is likely to raise at least $8 billion from what is expected to be a blockbuster U.S. stock market listing this year, despite efforts by Britain to persuade Arm to list in London as well.
Separately, building materials company CRH has recommended moving its primary listing from London to the United States, and Flutter Entertainment, an online betting firm, said it would consult on an additional U.S. listing.
Brexit largely cut off the City of London financial hub from the European Union and saw Amsterdam leapfrogging the UK capital to become Europe’s top share trading centre.
Arm’s rebuff has compounded soul-searching in the City over what more can be done to bolster London’s attraction as a global capital market as firms chase higher valuations in New York.
Alder said the decline in listings was due to several factors, including a lack of investment in companies by pension funds and insurers.
“What I don’t see is a holistic effort on how to address all of that yet, I think there should be,” he told parliament’s Treasury Select Committee.
FCA Chief Executive Nikhil Rathi said many factors were at play in Arm’s decision on where to list, and that the watchdog had looked at its rules for potential modifications.
UK listing rules had already been eased at the end of 2021, the most far-reaching reform in decades, said Rathi, a former head of London Stock Exchange plc.
The FCA is just “one part” of the conversation around UK capital market competitiveness, Rathi said, adding tax, stamp duty on UK shares, and sterling volatility were also issues.
“There is a wider question as to how are we prioritising the development of the capital market in broader public policy,” Rathi said.
When SoftBank bought Arm in 2016, conditions on the purchase did not include maintaining a link to the UK capital market, Rathi said.
Media reports have said SoftBank was concerned about a stricter requirement in Britain than in the United States regarding so-called related-party transactions, but Rathi said those UK safeguards were introduced after several scandals.
“Regulators need to be very, very careful about designing or agreeing bespoke regimes for individual companies,” Alder said. (Reporting by Huw Jones Editing by Mark Potter)
