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Rachel Reeves has pledged to revolutionise the UK’s capital markets and boost London IPOs as Labour seeks to reassure the City that it is committed to pro-growth regulation.
The Chancellor, who will unveil Labour’s much-anticipated Budget on 30 October, made the case for further reforms at a London gathering of finance heavyweights from the UK and US.
“Our vibrant, dynamic capital markets are some of the strongest and the deepest that we have globally – delivering capital to support businesses across Europe and around the world,” Reeves told the Financial Conduct Authority’s (FCA) International Capital Markets Conference on Tuesday.
“But we know there is even more that we can do to build on those strong foundations.”
Ministers and regulators have made urgent efforts to inject more life into Britain’s capital markets amid a dearth of IPO activity and heavy outflows from UK equity funds.
Reeves highlighted the FCA’s overhaul of its listings regime in July as a “once-in-a-generation reform in our rulebook that will revolutionise our markets”.
She added that changes to UK prospectus regulation, seen as a friction point for London-listed firms, would also create “a more agile and effective regime which will boost IPOs and optimise the capital raising process”.
Under FCA proposals unveiled in July, firms would no longer require hefty paperwork for secondary share sales unless they amount to 75 per cent of their existing shares, up from a previous threshold of 20 per cent.
Reeves further highlighted Labour’s move to take forward the Conservative-born Private Intermittent Securities and Capital Exchange System (Pisces), a scheme for UK private firms to have their shares traded on exchanges.
“This will help investors to invest in exciting private companies and support innovative companies to grow and ultimately to IPO in London,” Reeves said.
“Taken together, these reforms will ensure that the UK’s markets remain world-leading, with the right balance between risk and regulation, to provide a stable platform for growth.”
Her comments came hours after the government officially launched a new Regulatory Innovation Office, pushing financial and other regulators to cut red tape amid concerns that the current regime is holding back growth.
Last year, the previous Conservative government gave Britain’s financial regulators a “secondary objective” to facilitate economic growth – a mandate that Labour has pledged to continue.
Reeves is reportedly planning to send the FCA a formal “remit” letter later this month, telling the regulator it must prove that it is acting to promote the expansion of the UK financial services sector.
Balancing rules and risk
The FCA’s conference on Tuesday brought together bosses from global banks, hedge funds and other financial institutions, as well as more than 22 overseas regulators to discuss balancing rules and risk.
Reeves said the role of regulation was “not just to maintain stable and predictable markets, but to ensure those markets are put to work to drive forward prosperity”.
“There are choices that business and regulators can take and will need to take to ensure global capital flows are channelled into areas that truly matter for our long-term prosperity,” she added.
Reeves said crucial investment into critical infrastructure and clean energy “can only be unlocked with the support of effective financial markets”.
On 14 November, Reeves will deliver her first major speech to the UK’s financial and professional services industry.
Known as the “Mansion House Speech”, the Chancellor’s annual address often hints at the government’s plans for the industry and regulation.
Ahead of the Budget, financial firms have urged Reeves not to launch a tax raid on the sector as Labour scrambles to fill an alleged £22bn “black hole” in the public finances left by the Conservatives.