FCA's Walls Talks UK Deregulation, 'Golden Age' For The City
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What changes are being introduced for retail investors in the UK?
We're going to turn back to the UK now. The Chancellor, Rachel Reeves, has cancelled a planned speech at the London Stock Exchange this morning. She was due to attend an address from Downing Street from the Prime Minister instead. But she was due to mark the introduction of new rules for raising capital on London's markets, aimed at making them more competitive. It's been dubbed a new golden age for the city. Joining us now to discuss Simon Walls, who's the Executive Director for Markets at the Financial Conduct Authority. Simon, good morning. Good to see you. in studio today. Talk us through then the changes coming into force from today. This is about cutting red tape.
Yeah, that's right. I've just hot-footed it over from the stock exchange this morning where they had that big launch. These reforms are called proactra, which is not the snappiest, but there's real substance behind it. There's two things I'd highlight. One changes to prospectuses, so when companies who are already listed raise new capital on the stock exchange, they used to have to issue a new prospectus at 25%, 20%, and we've raised that all the way to 75%, making it cheaper, easier, and quicker to raise new capital. And then the event this morning was all about the debt side. We used to have a restriction where if a company issued debt in denominations of below 100,000, there was additional red tape.
There were additional forms to fill in. We looked to that. The people who were supposed to read it weren't, and it was really restricting participation for retail. So we've stripped it away. We've made it just the same, over 100,000 to below. We're actually really enthusiastic. The people retail in the UK may start investing in bonds from as little as a pound. So there was Real energy in the room today, notwithstanding that the Chancellor couldn't make it. Really good speeches and the whole of London's fixed income market out to support the new rules.
So, yeah, so changes on prospectuses, changes on the debt side, as you just mentioned as well. What other areas are you looking at?
How do the new prospectus rules simplify capital raising?
Is there still more to come and more that you can do?
Yes, certainly. I'd say we're halfway through a programme of really ambitious reform to UK capital markets. I'd say that each part is different, but the real hallmark is looking at those areas where we have pre-emptive checks often, but not only inherited from the EU and replacing them with disclosures. That's always when it's right and when there's enough information out there for the market. Our preference is to remove a gate, whether it be a check from the regulator, in some cases for shareholders, and replace it with disclosures and show a bit of faith in the price formation process.
What is the metric that you're judging the success of these changes? Is it the number of IPOs in London?
There's a lot of things. I should stress that we're doing this across all of the UK different asset classes. So it's not only focused on equities. Obviously, today's reform perspective is a major element in equities. We've set our own North Star metrics as the FCA alongside our strategy. Those are big things. We've got UK exports. We've got the contribution that financial services makes to the overall GDP of the country. But obviously, there's a lot of other factors that go into that. For these particular reforms, yeah, we'll look at the speed with which companies can to raise money. We will look at, in time, IPOs, whether this makes it even more attractive to list and raise capital in the UK. The early signs are good.
But of course, as implied in your question, there are loads of other factors that go into that. We just want to make sure the regulation is an asset to the UK rather than an attraction.
Yeah, I mean, I guess to inject a note of scepticism here, I mean, you know, all very well talking about UK markets hitting record highs, as I think the Chancellor probably would have done. And, you know, talking about a new golden age, former Chancellor talking about Big Bang 2.0. But can you understand why there can be a degree of scepticism from people in the city who hear politicians talking big, but maybe don't necessarily feel that they've delivered all that much?
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Chapters
4 chapters
1
What changes are being introduced for retail investors in the UK?
0:00–1:43
2
How do the new prospectus rules simplify capital raising?
1:43–3:52
3
What reforms are aimed at enhancing retail participation in capital markets?
3:52–7:31
4
What metrics are being used to measure the success of the new regulations?
7:31–7:37
Speakers
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