Treasury looks at tighter rules on listing of firms

The British Treasury department says it will launch a public consultation about the drawing up of tighter rules regarding the listing of public companies on London's Stock Exchange, with the potential for organizations to be rejected on the grounds of national security.

According to a report in the Financial Times, grounds for rejection could include if a company is owned by someone who is considered to be a threat to the interests of the United Kingdom, or if it is believed it could enable foreign states to access commercially sensitive material, or information of state importance. Particular attention could be paid to sectors such as defense, national infrastructure and technology.

"The UK's reputation for clean, transparent markets makes it an attractive global financial center," said a statement issued by the Treasury. "We're planning to bolster this by taking a targeted new power to block listings that pose a national security risk, and will launch a consultation to inform its design in the coming months."

This initiative comes as the London Stock Exchange continues to adjust to life after Brexit and the new rules by which it will work, and as Chancellor Rishi Sunak is expected to relax the UK's strict stock market listing rules in a bid to attract more overseas companies.

Supporters of the idea say it could pull in business from rival listings places such as New York, but opponents say it could send out a mixed message about the UK, and specifically the City of London, being more welcoming and liberated in the post-Brexit era.

"There is a conflict here between to what extent the government is... interventionist and to what extent it's free market, open doors," one senior executive told the Financial Times.

Sunak has previously been encouraged to try and attract more special purpose acquisition companies, or Spacs, which have proven particularly popular in the US, to the London listings.

These are companies set up allowing investors to raise large amounts of money specifically to merge with other fast-growing companies, a process which has been used to help a lot of tech companies go public.

This is a field of business that London is particularly keen to attract, and in March the former chief executive of the London Stock Exchange, Xavier Rolet, was quoted by the Daily Telegraph as urging Sunak to "grab some of the trade that has gone to New York and Amsterdam" by making it easier for Spac deals to be done in the UK.