Source: Saudi Aramci

FCA Defends Changing Listing Rules to Cater for Aramco IPO

  • FCA chief says regulator met with Saudi Aramco this year
  • Watchdog facing queries from lawmakers over motive for changes

The U.K. markets regulator defended a possible move to change listing rules that would make it easier for Saudi Aramco to go public in London, in what may become the world’s largest initial public offering.

Andrew Bailey, the chief executive officer of the Financial Conduct Authority, told lawmakers that he didn’t think the changes would weaken protections for investors, according to a letter from Bailey released Friday. He said the FCA met with Saudi Aramco earlier this year and discussed the possible IPO.

The FCA is reviewing the creation of a new listings category to better cater to companies owned by a sovereign country. Nicky Morgan and Rachel Reeves, the chairs of two Parliamentary committees, wrote to Bailey in September to express concerns over how much the FCA consultation was driven by Aramco. 

"Our proposals are consistent with the Treasury’s recommendations to the FCA, published at the time of the Spring Budget in early March," Bailey said in the letter, which is dated Oct. 6. "The recommendations include the point that London retaining its position as the leading international financial center supports the aim of sustainable economic growth."

The world’s top financial centers are fighting to attract the roughly 5 percent listing that could value the largest oil exporter at more than $1 trillion. Saudi Arabia plans to list on its stock exchange in Riyadh and sell shares on at least one other bourse outside the country. The main contenders for the listing are: London, New York, Hong Kong, Tokyo, Singapore and Toronto.

The FCA declined to comment beyond Bailey’s letter. Officials from the regulator are scheduled to appear before Morgan’s Treasury Committee later this month.

"Questions remain about the level of political involvement in the consultation," Morgan said in a statement on Bailey’s letter Friday. “The U.K.’s world-class reputation for upholding strong corporate governance mustn’t be watered down.”

The Aramco listing is the latest in a number of questions the FCA is facing from the Treasury Committee. Morgan has also written to Bailey about a report into business lending practices at Royal Bank of Scotland Group Plc. The FCA refused to hand over a report to the committee after it was leaked to the media in August, with Morgan proposing an external lawyer review the document on the committee’s behalf.

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