The City of London could relax some of its rules to attract more companies to the stock market and respond to European competition with Brexit, a government-commissioned report argues on Wednesday.
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Finance Minister Rishi Sunak, who is due to present the government's budget at midday and who had entrusted this mission on the City to the former European commissioner for financial services Jonathan Hill, will quickly examine his proposals, according to a press release from Treasure.
The report recommends in particular to relax the listing rules, in order to more easily attract young technology companies and to allow their founders to keep tighter control over their companies, in particular via a system with two types of shares.
It also calls for lowering to 15% the minimum level of capital that must be placed on the market during an IPO, against 25% currently, and to liberalize the rules on SPACs, ad hoc financial vehicles that exist. 'introduce on the market with the aim of acquiring companies.
The objective is to strengthen the competitiveness of the financial center of London, which faces stiff competition from New York, Asia and European markets which benefit from Brexit.
By leaving the single market, the City lost its
European
"
passport
" which allowed British financial firms to work for clients all over the EU.
Brussels, which fears regulatory dumping from London, is dragging its feet to grant a series of specialized equivalences that would allow British financial companies to operate in the EU.
Because of these complications, in two months, the City has already lost significant market share.
Amsterdam even doubled London in January for European equity brokerage.
“
The transfer of business to Amsterdam proves that we face stiff competition as a financial center not just from the United States or Asia, but from Europe,
” according to the UK report.
The finding is severe, recalling that the loss of influence dates back several years already, with a 40% drop in the number of companies listed in London since 2008. In addition, the major London indices are populated by financial groups or companies. representing "
the old world,
" according to the report.
Read also: The City of London has a "bright future" far from European regulations, according to the Bank of England
The latter notes that the SPACS market is "
dormant
" in London while it is booming in the United States and Amsterdam where they are becoming alternatives to traditional IPOs: only 4 SPACs have entered the London market. in 2020, compared to 248 in the United States.
Jonathan Hill however ruled out any desire to deregulate at all costs.
"
The recommendations do not consist in setting ourselves apart by proposing radical measures
" and "
they are consistent with the practices that exist in well-regulated financial centers in the United States in Asia and in Europe
", according to him.
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