- Reforms will make UK capital markets more attractive for
business and grow the economy
- New approach will seize benefits of Brexit to simplify the
rulebook and drive innovation
- Chancellor hails UK as ‘global capital for capital’
The Chancellor will set out new measures that will make UK
markets more appealing to firms seeking to float in British stock
markets and grow the economy in his Mansion House speech on
Monday (10 July).
The ‘Mansion House Reforms’ will simplify the rules for buying
and selling shares, improve research facilities, deliver higher
returns for investors, and lay out plans for an entirely new kind
of stock exchange.
They will be guided by the Chancellor’s three golden rules: to
secure the best possible outcome for pension savers; to
prioritise a strong and diversified gilt market as we seek to
deliver an evolutionary, rather than revolutionary, change in our
pensions market; and to strengthen the UK’s position as a leading
financial centre to create wealth and fund public services.
Chancellor of the Exchequer, , said:
“These common-sense changes are grasping our newfound Brexit
freedoms to simplify the rulebook - making it easier than ever
for firms to research, raise funds, and float their business.
“This is another step towards delivering the Prime Minister’s
priority to grow the economy and sends a clear message to anyone
looking to start, scale, and grow their business: look no further
than the United Kingdom – the global capital for capital.”
In 2021, over 120 companies listed in the UK, raising a total of
£17 billion in investment to help them scale up and grow the
economy. Companies like these create thousands of jobs and
contribute millions in tax receipts which fund vital public
services like police, nurses, and teachers.
Under the new measures, prospectuses will be simplified. This
means the document a firm must produce for any would-be investor
is easy to produce, accessible, and understandable. The industry
has long called for this as it saves companies time and money and
– importantly – will attract more firms to list in the UK.
The Chancellor will set out plans to establish an entirely new
kind of stock market that allows private companies to access
capital markets without floating on a stock exchange. This
‘Intermittent Trading Venue’ would be a world first and will help
firms grow and boost the UK economy. It will be complemented by a
move to make shares fully digital rather than written on paper,
saving businesses time and money.
The recommendations in Rachel Kent’s Independent Research Report
will be accepted by the Government – paving the way for a new
'Research Platform' that will provide a one-stop-shop for firms
looking for research experts. It also sets the path for
potentially removing the unbundling rules – an inherited EU law
that requires brokers to charge a separate fee for
research.
Protectionist EU laws that limit how and where firms can trade
shares were scrapped in last week’s Financial Services and
Markets Act to support the City’s global focus. The much-maligned
Share Trading Obligation and Double Volume Cap are a thing of the
past, meaning UK firms can access markets across the world to get
the best price for their trading.
This builds on the Chancellor’s Edinburgh Reforms and Solvency II
reforms which will unlock over £100 billion of productive
investment from insurance firms across the UK over a decade.
Notes to editors
- Detail on the Financial Services and Markets Act is available
here: https://www.gov.uk/government/news/rocket-boost-for-uk-economy-as-financial-services-and-markets-bill-receives-royal-assent
- Share Trading Obligation (STO) and Double Volume Cap (DVC)
are EU-inherited restrictions on how and where firms (such as
investment banks) can trade shares.
- The STO requires firms to trade on UK exchanges or on
specified overseas exchanges whereas the DVC caps the amount of
trading that can happen without pre-trade transparency. Scrapping
these protectionist and burdensome restrictions will ensure firms
can trade where they get the best price for their investors.
