October 13, 2017 / 4:17 PM / a year ago

Pensions body worried sovereign listing plan may damage UK market's reputation

LONDON (Reuters) - Britain’s pensions trade body said it is worried that proposals to loosen requirements for premium listings of state-controlled firms may damage the reputation of the British market.

The Pensions and Lifetime Savings Association (PLSA) said on Friday that proposals announced by Britain’s Financial Conduct Authority (FCA) in July could set an unwelcome precedent for diluting the governance standards of UK-listed companies, weaken minority investor protections and deter listings in the long term.

“There is a strong likelihood of political pressure on sovereign-owned companies to deal with other arms of the state on preferential terms,” Luke Hildyard from PLSA said in a statement, adding that the FCA’s proposals increase the possibility of investor exploitation.

The PLSA represents over 1,300 pension schemes with nearly 1 trillion pounds (1.00 trillion pounds)in assets under management on behalf of 20 million pension savers.

Under the proposals, a new “premium” stock market listing category will exempt companies controlled by sovereign states from complying with certain rules on related party transactions and controlling shareholders.

If adopted, the listing category will also be available to companies listed in London using depositary receipts, financial instruments used to represent a foreign company’s shares, allowing some companies with a small free float win a premium listing.

The proposals were announced as the London Stock Exchange competed to win the record listing of oil giant Saudi Aramco (IPO-ARMO.SE) which is expected to list around 5 percent of its stock.

The FCA had denied the proposals were instigated by the government, which is keen to win the mammoth listing, but on Friday it said they were in line with Britain’s aim of London remaining a leading financial centre.

Reporting by Dasha Afanasieva and Simon Jessop, editing by David Evans

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