Mark Austin: London’s capital markets must transform to stay relevant


Mark Austin is a partner at law firm Freshfields and author of the UK government’s Secondary Capital Raising Review.

Since Lord Hill published his UK Listings Review Over the past year, the progress made by the Treasury and the Financial Conduct Authority in reforming UK capital markets has been bold and rapid. They deserve huge praise for that.

The process continues. My Secondary Capital Raising Review was released last month, with the aim of making fundraising in the UK cheaper and more effective. His findings were accepted by both the Chancellor and the FCA. The FCA is also currently discussing other significant quoting reforms with the market as part of its Review of the efficiency of primary markets.

I am confident that within the next year we will have a modernized and relevant registration regime in the UK that will stand comparison with any other registration jurisdiction in the world.

We can see that our international peers are also thinking along the same lines. In the process of reform, in many cases they follow some of our ideas – which must mean that we are doing something right. This highlights the fact that the UK capital markets and London as a financial center are in a real race with our international peers, in increasingly competitive global capital markets, where many more places than by the past can accommodate global investors and large corporations.

While the UK was part of the EU, we were very often the default global listing choice for many international and domestic companies, as well as companies that for some reason did not want to go public. in the USA.

This is no longer necessarily the case. And we must be bold and courageous in our thinking about reform at this time to ensure that UK capital markets remain as relevant on the world stage over the next two decades as they have been in over the past 20 years and beyond.

In fact, the opportunity is greater than that, it is to become even more relevant. With all of our natural historical, language, and time zone advantages, among others, we have the opportunity to be the world’s first independent, neutral, and stable financial venue.

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But we cannot just maintain and advance our position. Regulatory reform is just one of the areas we need to address.

We need to look holistically at our public, quasi-public and private capital markets in the UK and make sure they are connected, asking ourselves how we make sure we have an ecosystem that enables and encourages founders and their businesses to want to get started. here, grow here, evolve here – and stay here.

It also requires discussions in other areas – for example, around investor attitudes in UK capital markets and the distinction between value and growth, how to generate better liquidity in public capital markets, how to ensure after stable IPOs, review our approach to compensation policies and the restrictions they place on directors and employees of listed companies.

Other topics include the approach and influence of proxy advisors, securing joint tax policies, including in relation to their use to encourage companies to locate here and then stay here, unlocking investment pension funds in the capital markets, as Lord Hill explained in the UK Listings Review, as well as the expansion of investment research.

Some of them are of a legal or regulatory nature, others are entirely or partially related to attitudes. These are all questions that the new Capital Markets Task Force is already beginning to examine and will seek to take the debate forward. But they also all need to be reviewed and discussed openly and honestly by UK capital markets stakeholders if we are to remain relevant on the global stage.

As I have said before, there is no point in having theoretically perfect UK capital markets if issuers and investors choose to use other markets.

And the price is far more important than just the position of the UK capital markets and London as a financial centre, as a leader on the world stage. Prosperous and relevant UK capital markets, both public and private, benefit the UK economy as a whole, generating more jobs, higher wages and overall economic growth for the benefit of all.