We're going to turn back to the UK now. The Chancellor at Rachel Reeves has canceled a plan speech to the London Stock Exchange this morning. She's 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 Wall,
who's the executive director from Markets to 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 fitted it over from the Stock Exchange this morning where they had that big launch. These reforms are called Poatra, which is not the snappiest, but there's real substance behind it. There's two things i'd highlight. One change is 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 twenty percent.
We've raised that all the way to seventy five percent, 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 one hundred thousand there was additional red tape. There are additional forms to fill in. We look 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 one hundred thousand 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 fixing come market out to support the new rules.
So yeah, so changes on perspectives, changes on the debt side, as you just mentioned as well. What other areas you're looking at is is there still still more to come in, more that you can do.
Yeah, Suddenly, I'd say we're halfway through a program 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 preemptive 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? Are the number of IPOs in London.
There's a lot of things. Man, 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 perspectives, it's a major element in equities. We've set out 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 lots of other
factors that go into that. For these particular reforms, yeah, we'll look at the speed with which companies can raise money. We will look at in time IPOs whether this makes it even more attractive to list and raise 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 attraction.
Yeah, I mean, I guess to inject to notice skeptism here. I mean, you know all very well talking about UK markets hitting record highs, as you know, I think the Chancellor probably would have would have done, and you know, talking about a new golden age former chance to talking
about a big bang two point eight. But can you understand why there, you know, where there can be a degree of skeptism form people in the city who hear politicians talking big but maybe don't necessarily feel that they've delivered all that much.
I mean, you've quoted things there from the chances of speech. It's not not my place to comment on. All I would say is that the program of reform taken together, each individual thing contributes to both the whatever it does, but also the spirit in the city. I would say the energy in the city is good. At the moment. We are the second largest market in the world unambiguously with the world leader in drivetied markets community markets EFFS.
So there's of strength. But it's a competitive world out there. We're competing with all sorts of established and competitive markets. So we need to keep this challenge of mindset. But I'd say the mood is good, but you're right to have some caution. There's a lot of things we need to be on this road for a long time.
The FCA is talked about the dialing up risk, meaning that more things will go wrong. What kind of things are you preparing for and when does the risk cross a red line for you when you're thinking about changes to regulation.
Yeah, it's a good question, difficult in the abstract. I mean, the first thing I would say is everybody in the city and wider into politicians are talking about a move away from risk, aversion this sense that we need to optimize risk rather than just reduce it. But the proof of the pudding is in the eating. Much gets much harder when you talk about specific risks and making sure
that the societal appetite is there. One of the things that we're really keen to support is more retail participation in capital markets probably defined lots of initiatives the ones I mentioned today, but also targeted support a way of bridging the gap between full fat financial advice and what people use at the moment. But the more retail invest in capital markets, we have to accept that sometimes you lose money. This is about the medium term, the long term,
rather than the short term. And I'm not sure that the societal appetite is yet established. I think we've made great strides, but we need to be on this path for three, four or five years for people to say, Okay, the UK has really got it, and i'd apply that. Of course, a whole range of the reforms we're doing.
Each of them have downside. These aren't always low hanging fruit, but we try and get that out clear and try and get it into society so that when the downsides happen, we can hold our nerve and keep going forward.
Yeah, I mean, maybe one specific risk we could talk about then, given that greater appetite for risk, and also, as you said, the desire to see more retail participation. Obviously huge theme in markets and in finance at the moment is the explosion in private markets that we're seeing Wall Street, you know, hugely excited about the opportunity of selling some of these alternatives to the wealthy and also, you know, to retail investors. Does that kind of you know,
full fat approach to risk in retail participation? Does that fully apply when it comes to private markets? And you know, Granny is investing in Pee and all sorts, so you.
Give me an opportunity. There are actually three things went out today. I didn't think i'd get the third run across. But there's a public offer platform where we're saying, if you're a private company you want to raise more than five million pounds as a one off, here's a structure, and actually that structure seeks to adress the point you're raising, which is putting a little bit more due diligence in
to protect retail in those investments. We have pisces coming down the track, and new type of trading venue again for private companies, a sort of bridge between the private markets and the public markets. Your bought a question. There
are no easy answers on these things. I think private markets as an asset class, so it's been booming and many good returns available, but the absolute heart of it is a is reduced liquidity that's almost the thing about private marketing, as they're not public and the valuations are
less frequent and in many ways harder. So I'm not averse in any means by measures to get that into retail portfolios, but there is no you can't pretend that it's liquid, So I'm skeptical about people use the term democratization. It does raise my eyebrows sometimes because private markets need
to retain the features of private markets. So I think yes, in safe ways, including the long term asset funds, the perfectly reasonable part of people's portfolios, but we just need to make sure that it's done in a responsible way.
Okay, Simon, great to have you with us. Thanks very much for joining us on the program this morning.