Chancellor of the Exchequer, Rishi Sunak has proposed substantial reforms to the UK stock market rules in his recent budgetary announcement which looks to bolster the UK’s position as an international financial capital.

The proposed changes came as a result of a review of the stock market, carried out by Lord Jonathan Hill which has advocated for the UK to implement more company-friendly regulations in a bid to keep the UK market competitive with growing financial centres such as Amsterdam.

The key recommendation from the review suggests the introduction of a dual class share structure that will afford much greater voting powers to the founders of companies post-IPO. Such share structures all already commonplace in California’s Silicon Valley where CEO’s such as Mark Zuckerberg have been able to retain more control of their companies. Shortly following this proposal, Deliveroo announced its intention to list themselves on the London Stock Exchange for an estimated £5bn; making it the UK’s most valuable IPO in recent years. The UK Chancellor will hope this post-Brexit shift in stock market regulations will attract fast-growing tech companies to list themselves in London instead of foreign markets such as America and Amsterdam which have proved a popular choice in recent years.

Another strategic recommendation from Lord Hill was the liberalisation of the listing rules to allow for special purpose acquisition companies (SPACs) or so called ‘blank-cheque’ companies to list themselves in London. Over the past year a ‘SPAC boom’ has occurred as they have offered private companies with a much quicker, more certain and transparent method of going public. The UK has thus far missed out on the SPAC boom due to their stringent and arduous listing rules which would prohibit the launching of such companies in the market.

These alterations to the stock market proposed by Mr Sunak has been welcomed by the UK’s private sector and will undoubtably help the UK in clawing back and maintain its position as a global financial centre.

by Oliver Watt

Sunak's Stock Market Shift