A prolonged drought in listings and what many view as corrosive negativity within the London market, has led to calls for substantial reforms to the UK’s capital markets. Leading the drive for reforms is the Capital Markets Industry Taskforce (CMIT), a collaboration of CEOs, chairs, asset owners and managers, and industry leaders representing private and publicly listed companies. Dame Julia Hoggett, CEO of the London Stock Exchange, leads the CMIT.
In the summer of 2022, Dame Hoggett assembled a group of leading City figures to tackle the issues affecting Britain’s capital markets. This marked the launch of the coalition aimed at directing a radical overhaul of the market. The main objectives of the CMIT are reforming the risk-averse pension system, enhancing domestic funding avenues for startups, and creating a more attractive environment for companies considering public listings.
As the Financial Times points to in an article on the push for reforms, one of the major challenges facing CMIT is convincing more companies to list on the London Stock Exchange.
The group also aims to address corporate governance and remuneration rules that put London-listed companies at a disadvantage compared to their US counterparts. By advocating for a more level playing field, the taskforce hopes to make London a more attractive and competitive market.
The taskforce seeks to secure political backing for these changes. As the government is a crucial component of efforts for reforms, the group established close ties with the Conservative government. The Conservative Chancellor Jeremy Hunt publicly endorsed their agenda, and members spent significant time at the Treasury, assisting with the refining of proposals that were included in the Chancellor’s Autumn Statement last November.
With polls suggesting that Labour may win the general election, the potential shift in political power adds an element of uncertainty. While Labour’s focus might differ from the Conservatives, the CMIT believes that its agenda aligns with the party’s broader economic goals, particularly when it comes to pension reform and encouraging private investment.
Part of the taskforce’s sales pitch to politicians is the benefits a thriving equity market creates and that having a healthy number of private companies able to list on the London market would extend beyond City bankers, accountants, and lawyers.
As Katharine Braddick, CMIT member, group head of strategic policy at Barclays, and a former Treasury official, told the FT: “We need the capital markets to work better because it makes us all better off.”
Sir Jonathan Symonds, chair of FTSE 100 drugmaker GSK, and member of CMIT, described the aim of the reforms, particularly those designed to boost investment in UK companies, as being to lay a “foundation stone.”
“This is a multiyear, if not multi-decade transformation,” said Symonds.