Will a major revision of listing rules in the UK work?

Katie Martin (0:00)

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Pushkin.

The UK is embarking on another big rejig of its stock market listing rules in an effort, yes, again, to fire up and modernize its offering to international investors and stop the London Stock Exchange getting eaten alive by the US. It's been the talk of the city over the past week or so, and it's the big one this time. This is one of the bigger rule rejigs that we've seen in decades. So today on the show, we're asking really again, will it actually work this time? This is Unhedged, the markets and finance podcast from Financial Times and Pushkin. I'm Katie Martin, a markets columnist here at the FT in London. And here to help us get a sense of all this is city supremo, Michael O'Dwyer. Michael, thank you for joining us.

Michael O'Dwyer (1:18)

Thank you for having me.

Katie Martin (1:19)

You haven't done this before, have you?

Michael O'Dwyer (1:20)

Not with you, Katie. I'm sure it'll be an experience.

Katie Martin (1:24)

Let's see if he ever agrees to do it again. So look, diagnose the problem for me here. You know, Brits, we're very good at criticizing ourselves and beating ourselves up. But why are we beating ourselves up about the London Stock Exchange?

Michael O'Dwyer (1:38)

Well, I think the London Stock Exchange obviously is something that the UK has been proud of historically, but it's just been getting a bit of a battering in recent years, hasn't it? We've seen big FTSE 100 companies like Flotter, CRH, plenty of others, moving their primary listings to New York, looking for higher valuations, deeper liquidity pools. And it's all just felt a bit miserable, hasn't it? And it's failing to attract the big bumper listings that have been more attainable in the past.

And so there's this real will, both in the city and also now politically in the UK, to try and do something about this, whether any of it works, we can get into, but there's a real effort to try and fix it.

Katie Martin (2:16)

No, it's not just a London thing, right? Like European markets are also a bit like crap, frankly, compared to the US in terms of attracting exciting new companies. I mean, you look over to the US, you've got the magnificent seven tech stocks and you've got this huge AI boom. And Europe and the UK are just sort of looking across the Atlantic at this and saying, why can't we have a bit of this, but we can't?

Michael O'Dwyer (2:39)

Totally. I mean, I think it's certainly not unique to London.

What he's slightly worrying, I think, for some people here is that London is not the automatic pick, even within Europe, perhaps in the way that it used to be. I mean, you see things like the big CVC, Private Equity Group, floating in Amsterdam this year, and that does hurt a little bit for people in London who think that should have been us. So it's not just about, you know, there's an argument that the New York horse is bolted, you're never going to catch it now. But if you can at least consolidate your position as being preeminent within Europe, that will be a start.

Katie Martin (3:10)

Yeah, within Europe and also like within emerging markets, like one of the great things that London always had going for it as a stock exchange was that we could attract companies that were looking for somewhere neutral to list. So they don't want to list on like a really small emerging market stock exchange somewhere. They want like a kind of gold standard, properly regulated, internationally recognized exchange list on where there's a deep pool of capital, lots of asset managers.

We're not even really kind of getting them anymore either, right? So something's got to give.

Michael O'Dwyer (3:38)

Yeah, absolutely. And on top of that then, I mean, it's not just the sort of competition between venues, but also private capital is, as you've talked about plenty of times here, I'm sure it's just totally changed the game, right? It's a different world. It's no longer automatically a requirement that when you reach a certain size, you've got a list. So everyone's having to work a bit harder, not just London, but yeah, so that's just another thing that makes it that bit more difficult.