'A Sensible Balance Between Open Markets And Integrity' : Listing Rules

When the UK regulator, the Financial Conduct Authority (FCA) proposed the creation of a new category within its premium listing regime to cater for "companies controlled by a shareholder that is a sovereign country", it was a very British moment. Everyone knew that we were talking about Saudi Aramco and the world's biggest flotation, but only the media - and investors via the media - actually said so.

Since then the debate has become a lot less coy.

MPs have asked questions,  and three months later we are all better informed about the meetings that have taken place to discuss such a change to the listing regime. Investors have also become increasingly vocal about their concerns. The world's biggest sovereign wealth fund has described the proposals as a "step back in terms of investor protection."

Xavier Rolet, the chief executive of the London Stock Exchange, who accompanied Prime Minister Theresa May to Saudi Arabia in April, first spoke out in public in August, backing the FCA's review of the listing rules. We have since learnt that he will be stepping down next year in 2018 from his role as CEO of the LSE after a decade.

You could say a lot has happened since the premium listing change was first proposed. Or you might feel that it reflects the state of the country as a whole since the vote to leave the European Union in that nothing has really changed, but everything feels a lot worse. With such a backdrop, it is surely no time to have to play any more guessing games on where we are headed on a commitment to the highest standards of corporate governance, essential if business is to thrive.

Andrew Bailey, the FCA's erudite and extremely articulate CEO, gave a recent speech to the Investment Association's annual dinner at Mansion House in London that puzzled me in terms of a comment he made when concluding.

"We are deeply committed to open markets. We believe that consumer protection and market integrity can be effectively achieved with open markets. And, we believe that strong competition at home is the best way to support international competitiveness. These are very strongly held principles" he said.

He went on: "...These principles also shape our proposals on the listing rules. I believe that our proposals create a sensible balance between open markets and integrity.....Let me add that with clear principles, objectives and explanations of our proposals, to pick an argument about whether we should or should not meet people who want to operate within the UK regime is in my view to pick the wrong argument."

"The right debate", said Mr Bailey, "is surely around the substance of how to get the appropriate balance between open markets and the integrity of these markets."

There's something very disquieting about that last sentence. I didn't think integrity was something you could use to strike a balance. I thought it was something with which you begin, and do not compromise, and that is what makes it integrity.

Either I am misunderstanding his words, or he is just too clever for me to fathom. Either way, the progress of this rule change for the listing regime feels powered by the Brexit factor, one that will increasingly and inevitably dictate our choices.

The big problem for business, and for those who seek to ensure that the United Kingdom remains attractive to the right investors, is how the rest of the world sees it. For all the talk about the blue-chip reputation of UK plc and rethinking corporate governance 25 years after Cadbury, spare a thought too about the reputation of Britain as a whole.