After Brexit, the City is preparing its counterattack

Above all, don’t talk about deregulation. Officially, neither the British Treasury, nor the Bank of England, nor any of the established lobbyists want to go back to the soft regulation period of the turn of the millennium. But after the difficult start of Brexit – Amsterdam has stolen from London the rank of first place in the exchange of European equities – the British government is stepping up initiatives to improve the competitiveness of the London market.

On the sidelines of the budget presentation on Wednesday March 3, the Chancellor of the Exchequer, Rishi Sunak, welcomed a report he had commissioned from Jonathan Hill, a former British European commissioner for financial services. This presents a series of measures to put in place “An intelligent application” international standards, in order to allow the City to be “More responsive” and “More flexible”.

“Improve our position”

“After a long period, linked to Brexit, where London and financial services were on the defensive, we (…) have the opportunity to get back to improving our position as one of the world’s leading financial centers ”, says Mr. Hill. He proposes that the Financial Conduct Authority (FCA), the British regulator, be now obliged to take into account the competitiveness of the City when it develops its rules.

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The heart of Mr Hill’s report is a major reform of stock market rules. Since 2015, London has attracted only 5% of IPOs. Mr. Hill suggests allowing in particular to have two different classes of shares (the founders of the company can have a preferred class, which gives them more voting rights) on the main market of the London Stock Exchange, this which is banned today.

He also wants to pave the way for Special Purpose Acquisition Companies, which are empty shells introduced on the stock market, with the objective of making acquisitions. He wishes, finally, to lighten the “Prospectus”, these voluminous documents revealing the financial state of a company before it is put on the market.

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