Reform of the investment rules around the stock exchange are needed to ensure there is a thriving UK equity market, says the CBI.
The employers’ group has called for the removal of stamp duty on shares, tax incentives for firms wanting to list on the market, a simplification of annual reporting and more encouragement for retail investors to invest in shares. It also wants help for those firms previously taken private to return to public markets.
A new report from the CBI, Revitalising UK Public Markets, published today comes ahead of the Chancellor’s Mansion House speech when she is expected to lay out further reforms to the pensions sector and individual savings accounts (ISAs).
It also comes amid a barren spell for new listings and an exodus of companies from the London Stock Exchange, including those relocating to other markets with less rigorous regulatory regimes.
There were nine new listings in the first half of this year which raised £182.8 million, a 64% year-on-year drop, while 213 firms have left the LSE since 2016. The chief executive of AstraZeneca has suggested recently that the company may move its listing to New York.
Rupert Soames, chairman of the CBI and chairman of Smith & Nephew, the FTSE 100 medical equipment company, said it was a “moment of huge change”.
He said he would support cutting allowances for cash ISAs to get more people investing, which the chancellor is understood to be considering.
He added that the departure of companies from the stock market mattered because the it is part of the foundation of a financial services industry that pays 10% of all taxes.
“For the first time, listed companies have come together in a systematic way to the debate on how UK equity markets should be run,” he said.
“Until now, the voice of those who have the biggest stake in the success of the market – the companies who choose to be listed in London – has been barely heard. The CBI aims to help redress that by bringing their perspectives into the conversation alongside government, investors and regulators.”
Dame Julia Hoggett, CEO London Stock Exchange, said: “Our capital markets are an ecosystem. And in a world where we compete globally for capital, the requirements for them to remain competitive calls for all stakeholders – companies, investors, government, regulators, the exchange and other market participants – to work together to ensure our markets continue to provide a globally leading destination to raise capital.
“It is also vital that as a country we recognise the importance of this for the growth of our economy and with it the improvement in living standards across the country.
“We welcome the recommendations laid out in this report which reflect the number of parties both impacting, and impacted by, this agenda and the continued partnership required.”
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