1 00:00:00,000 --> 00:00:01,520 Speaker 1: We're going to turn back to the UK now. The 2 00:00:01,560 --> 00:00:03,800 Speaker 1: Chancellor at Rachel Reeves has canceled a plan speech to 3 00:00:03,840 --> 00:00:06,600 Speaker 1: the London Stock Exchange this morning. She's due to attend 4 00:00:06,640 --> 00:00:09,200 Speaker 1: an address from Downing Street from the Prime Minister instead, 5 00:00:09,200 --> 00:00:11,399 Speaker 1: but she was due to mark the introduction of new 6 00:00:11,480 --> 00:00:14,720 Speaker 1: rules for raising capital on London's markets aimed at making 7 00:00:14,800 --> 00:00:18,480 Speaker 1: them more competitive. It's been dubbed a new golden age 8 00:00:18,480 --> 00:00:20,680 Speaker 1: for the city. Joining us now to discuss Simon Wall, 9 00:00:20,760 --> 00:00:24,000 Speaker 1: who's the executive director from Markets to the Financial Conduct Authority. Simon, 10 00:00:24,040 --> 00:00:26,840 Speaker 1: good morning, Good to see you in studio today. Talk 11 00:00:26,920 --> 00:00:30,000 Speaker 1: us through then the changes coming into force from today. 12 00:00:30,040 --> 00:00:31,880 Speaker 1: This is about cutting red tape. 13 00:00:32,040 --> 00:00:34,720 Speaker 2: Yeah that's right. I've just hot fitted it over from 14 00:00:34,720 --> 00:00:37,440 Speaker 2: the Stock Exchange this morning where they had that big launch. 15 00:00:38,000 --> 00:00:40,840 Speaker 2: These reforms are called Poatra, which is not the snappiest, 16 00:00:40,840 --> 00:00:44,159 Speaker 2: but there's real substance behind it. There's two things i'd highlight. 17 00:00:44,800 --> 00:00:47,320 Speaker 2: One change is to prospectuses. So when companies who are 18 00:00:47,320 --> 00:00:50,559 Speaker 2: already listed raise new capital on the Stock Exchange, they 19 00:00:50,640 --> 00:00:53,880 Speaker 2: used to have to issue a new prospectus at twenty percent. 20 00:00:54,200 --> 00:00:56,080 Speaker 2: We've raised that all the way to seventy five percent, 21 00:00:56,160 --> 00:00:59,440 Speaker 2: making it cheaper, easier and quicker to raise new capital. 22 00:00:59,800 --> 00:01:01,480 Speaker 2: And then the event this morning was all about the 23 00:01:01,520 --> 00:01:04,280 Speaker 2: debt side. We used to have a restriction where if 24 00:01:04,280 --> 00:01:07,759 Speaker 2: a company issued debt in denominations of below one hundred 25 00:01:07,760 --> 00:01:10,360 Speaker 2: thousand there was additional red tape. There are additional forms 26 00:01:10,360 --> 00:01:12,920 Speaker 2: to fill in. We look to that. The people who 27 00:01:12,920 --> 00:01:14,679 Speaker 2: were supposed to read it weren't and it was really 28 00:01:14,760 --> 00:01:17,759 Speaker 2: restricting participation for retail. So we've stripped it away. We've 29 00:01:17,760 --> 00:01:20,560 Speaker 2: made it just the same over one hundred thousand to below. 30 00:01:20,800 --> 00:01:24,080 Speaker 2: We're actually really enthusiastic the people retail in the UK 31 00:01:24,200 --> 00:01:27,119 Speaker 2: may start investing in bonds from as little as a pound. 32 00:01:27,360 --> 00:01:30,080 Speaker 2: So there was real energy in the room today, notwithstanding 33 00:01:30,120 --> 00:01:32,399 Speaker 2: that the Chancellor couldn't make it really good speeches and 34 00:01:32,440 --> 00:01:35,200 Speaker 2: the whole of London's fixing come market out to support 35 00:01:35,200 --> 00:01:36,200 Speaker 2: the new rules. 36 00:01:36,400 --> 00:01:40,280 Speaker 3: So yeah, so changes on perspectives, changes on the debt side, 37 00:01:40,280 --> 00:01:42,680 Speaker 3: as you just mentioned as well. What other areas you're 38 00:01:42,680 --> 00:01:44,840 Speaker 3: looking at is is there still still more to come in, 39 00:01:44,920 --> 00:01:45,720 Speaker 3: more that you can do. 40 00:01:46,840 --> 00:01:50,000 Speaker 2: Yeah, Suddenly, I'd say we're halfway through a program of 41 00:01:50,000 --> 00:01:53,400 Speaker 2: really ambitious reform to UK capital markets. I'd say that 42 00:01:54,160 --> 00:01:56,280 Speaker 2: each part is different, but the real hallmark is looking 43 00:01:56,280 --> 00:01:59,320 Speaker 2: at those areas where we have preemptive checks often but 44 00:01:59,440 --> 00:02:03,880 Speaker 2: not only inherited from the EU and replacing them with disclosures. 45 00:02:04,040 --> 00:02:06,880 Speaker 2: That's always when it's right and when there's enough information 46 00:02:06,920 --> 00:02:09,239 Speaker 2: out there for the market. Our preference is to remove 47 00:02:09,240 --> 00:02:11,480 Speaker 2: a gate, whether it be a check from the regulator 48 00:02:11,480 --> 00:02:14,400 Speaker 2: in some cases for shareholders and replace it with disclosures 49 00:02:14,400 --> 00:02:16,440 Speaker 2: and show a bit of faith in the price formation process. 50 00:02:17,320 --> 00:02:19,360 Speaker 1: What is the metric that you're judging the success of 51 00:02:19,400 --> 00:02:21,880 Speaker 1: these changes? Are the number of IPOs in London. 52 00:02:23,080 --> 00:02:25,160 Speaker 2: There's a lot of things. Man, I should stress that 53 00:02:25,560 --> 00:02:28,520 Speaker 2: we're doing this across all of the UK, different asset classes, 54 00:02:28,520 --> 00:02:31,960 Speaker 2: so it's not only focused on equities. Obviously, today's reform perspectives, 55 00:02:32,040 --> 00:02:34,960 Speaker 2: it's a major element in equities. We've set out our 56 00:02:34,960 --> 00:02:37,920 Speaker 2: own north Star metrics as the FCA alongside our strategy. 57 00:02:38,520 --> 00:02:42,600 Speaker 2: Those are big things. We've got UK exports, we've got 58 00:02:42,600 --> 00:02:46,000 Speaker 2: the contribution that financial services makes to the overall GDP 59 00:02:46,120 --> 00:02:47,720 Speaker 2: of the country, but obviously there's a lots of other 60 00:02:47,760 --> 00:02:50,760 Speaker 2: factors that go into that. For these particular reforms, yeah, 61 00:02:50,760 --> 00:02:53,840 Speaker 2: we'll look at the speed with which companies can raise money. 62 00:02:53,840 --> 00:02:57,359 Speaker 2: We will look at in time IPOs whether this makes 63 00:02:57,400 --> 00:03:00,760 Speaker 2: it even more attractive to list and raise in the UK. 64 00:03:00,880 --> 00:03:03,639 Speaker 2: The early signs are good, but of course, as implied 65 00:03:03,680 --> 00:03:05,800 Speaker 2: in your question, there are loads of other factors that 66 00:03:05,840 --> 00:03:07,320 Speaker 2: go into that. We just want to make sure the 67 00:03:07,400 --> 00:03:09,760 Speaker 2: regulation is an asset to the UK rather than attraction. 68 00:03:10,360 --> 00:03:13,880 Speaker 3: Yeah, I mean, I guess to inject to notice skeptism here. 69 00:03:13,880 --> 00:03:16,760 Speaker 3: I mean, you know all very well talking about UK 70 00:03:16,880 --> 00:03:19,320 Speaker 3: markets hitting record highs, as you know, I think the 71 00:03:19,400 --> 00:03:22,760 Speaker 3: Chancellor probably would have would have done, and you know, 72 00:03:22,800 --> 00:03:24,839 Speaker 3: talking about a new golden age former chance to talking 73 00:03:24,840 --> 00:03:26,800 Speaker 3: about a big bang two point eight. But can you 74 00:03:26,880 --> 00:03:28,800 Speaker 3: understand why there, you know, where there can be a 75 00:03:28,840 --> 00:03:30,880 Speaker 3: degree of skeptism form people in the city who hear 76 00:03:31,080 --> 00:03:33,960 Speaker 3: politicians talking big but maybe don't necessarily feel that they've 77 00:03:34,000 --> 00:03:34,760 Speaker 3: delivered all that much. 78 00:03:35,960 --> 00:03:37,920 Speaker 2: I mean, you've quoted things there from the chances of speech. 79 00:03:38,000 --> 00:03:41,120 Speaker 2: It's not not my place to comment on. All I 80 00:03:41,120 --> 00:03:44,200 Speaker 2: would say is that the program of reform taken together, 81 00:03:44,280 --> 00:03:48,280 Speaker 2: each individual thing contributes to both the whatever it does, 82 00:03:48,320 --> 00:03:50,040 Speaker 2: but also the spirit in the city. I would say 83 00:03:50,040 --> 00:03:51,840 Speaker 2: the energy in the city is good. At the moment. 84 00:03:52,560 --> 00:03:55,440 Speaker 2: We are the second largest market in the world unambiguously 85 00:03:55,520 --> 00:03:59,440 Speaker 2: with the world leader in drivetied markets community markets EFFS. 86 00:03:59,640 --> 00:04:02,320 Speaker 2: So there's of strength. But it's a competitive world out there. 87 00:04:02,360 --> 00:04:05,160 Speaker 2: We're competing with all sorts of established and competitive markets. 88 00:04:05,160 --> 00:04:07,000 Speaker 2: So we need to keep this challenge of mindset. But 89 00:04:07,000 --> 00:04:08,840 Speaker 2: I'd say the mood is good, but you're right to 90 00:04:08,880 --> 00:04:10,520 Speaker 2: have some caution. There's a lot of things we need 91 00:04:10,560 --> 00:04:11,680 Speaker 2: to be on this road for a long time. 92 00:04:12,000 --> 00:04:15,000 Speaker 1: The FCA is talked about the dialing up risk, meaning 93 00:04:15,000 --> 00:04:18,720 Speaker 1: that more things will go wrong. What kind of things 94 00:04:18,720 --> 00:04:21,800 Speaker 1: are you preparing for and when does the risk cross 95 00:04:21,960 --> 00:04:24,120 Speaker 1: a red line for you when you're thinking about changes 96 00:04:24,200 --> 00:04:24,919 Speaker 1: to regulation. 97 00:04:25,320 --> 00:04:27,680 Speaker 2: Yeah, it's a good question, difficult in the abstract. I mean, 98 00:04:27,720 --> 00:04:31,159 Speaker 2: the first thing I would say is everybody in the 99 00:04:31,200 --> 00:04:35,120 Speaker 2: city and wider into politicians are talking about a move 100 00:04:35,160 --> 00:04:37,360 Speaker 2: away from risk, aversion this sense that we need to 101 00:04:37,440 --> 00:04:40,560 Speaker 2: optimize risk rather than just reduce it. But the proof 102 00:04:40,600 --> 00:04:42,960 Speaker 2: of the pudding is in the eating. Much gets much 103 00:04:43,000 --> 00:04:46,240 Speaker 2: harder when you talk about specific risks and making sure 104 00:04:46,279 --> 00:04:49,320 Speaker 2: that the societal appetite is there. One of the things 105 00:04:49,320 --> 00:04:52,040 Speaker 2: that we're really keen to support is more retail participation 106 00:04:52,120 --> 00:04:56,000 Speaker 2: in capital markets probably defined lots of initiatives the ones 107 00:04:56,040 --> 00:04:59,000 Speaker 2: I mentioned today, but also targeted support a way of 108 00:04:59,640 --> 00:05:02,640 Speaker 2: bridging the gap between full fat financial advice and what 109 00:05:02,680 --> 00:05:05,719 Speaker 2: people use at the moment. But the more retail invest 110 00:05:05,800 --> 00:05:09,279 Speaker 2: in capital markets, we have to accept that sometimes you 111 00:05:09,320 --> 00:05:11,440 Speaker 2: lose money. This is about the medium term, the long term, 112 00:05:11,520 --> 00:05:13,480 Speaker 2: rather than the short term. And I'm not sure that 113 00:05:13,520 --> 00:05:16,960 Speaker 2: the societal appetite is yet established. I think we've made 114 00:05:16,960 --> 00:05:19,440 Speaker 2: great strides, but we need to be on this path 115 00:05:19,520 --> 00:05:21,880 Speaker 2: for three, four or five years for people to say, Okay, 116 00:05:21,880 --> 00:05:23,920 Speaker 2: the UK has really got it, and i'd apply that. 117 00:05:23,960 --> 00:05:26,720 Speaker 2: Of course, a whole range of the reforms we're doing. 118 00:05:26,760 --> 00:05:29,640 Speaker 2: Each of them have downside. These aren't always low hanging fruit, 119 00:05:30,000 --> 00:05:31,560 Speaker 2: but we try and get that out clear and try 120 00:05:31,600 --> 00:05:35,120 Speaker 2: and get it into society so that when the downsides happen, 121 00:05:35,279 --> 00:05:36,880 Speaker 2: we can hold our nerve and keep going forward. 122 00:05:37,520 --> 00:05:40,280 Speaker 3: Yeah, I mean, maybe one specific risk we could talk 123 00:05:40,320 --> 00:05:45,320 Speaker 3: about then, given that greater appetite for risk, and also, 124 00:05:45,360 --> 00:05:48,440 Speaker 3: as you said, the desire to see more retail participation. 125 00:05:49,040 --> 00:05:52,440 Speaker 3: Obviously huge theme in markets and in finance at the 126 00:05:52,440 --> 00:05:56,400 Speaker 3: moment is the explosion in private markets that we're seeing 127 00:05:56,480 --> 00:05:58,960 Speaker 3: Wall Street, you know, hugely excited about the opportunity of 128 00:05:59,279 --> 00:06:03,200 Speaker 3: selling some of these alternatives to the wealthy and also, 129 00:06:03,240 --> 00:06:07,000 Speaker 3: you know, to retail investors. Does that kind of you know, 130 00:06:07,120 --> 00:06:09,760 Speaker 3: full fat approach to risk in retail participation? Does that 131 00:06:09,800 --> 00:06:12,480 Speaker 3: fully apply when it comes to private markets? And you know, 132 00:06:12,920 --> 00:06:16,080 Speaker 3: Granny is investing in Pee and all sorts, so you. 133 00:06:16,080 --> 00:06:17,800 Speaker 2: Give me an opportunity. There are actually three things went 134 00:06:17,800 --> 00:06:19,640 Speaker 2: out today. I didn't think i'd get the third run across. 135 00:06:19,640 --> 00:06:21,800 Speaker 2: But there's a public offer platform where we're saying, if 136 00:06:21,839 --> 00:06:23,560 Speaker 2: you're a private company you want to raise more than 137 00:06:23,560 --> 00:06:26,160 Speaker 2: five million pounds as a one off, here's a structure, 138 00:06:26,200 --> 00:06:29,320 Speaker 2: and actually that structure seeks to adress the point you're raising, 139 00:06:29,320 --> 00:06:31,880 Speaker 2: which is putting a little bit more due diligence in 140 00:06:31,960 --> 00:06:35,680 Speaker 2: to protect retail in those investments. We have pisces coming 141 00:06:35,760 --> 00:06:37,919 Speaker 2: down the track, and new type of trading venue again 142 00:06:38,000 --> 00:06:41,279 Speaker 2: for private companies, a sort of bridge between the private 143 00:06:41,279 --> 00:06:45,600 Speaker 2: markets and the public markets. Your bought a question. There 144 00:06:45,600 --> 00:06:48,400 Speaker 2: are no easy answers on these things. I think private 145 00:06:48,480 --> 00:06:51,880 Speaker 2: markets as an asset class, so it's been booming and 146 00:06:52,000 --> 00:06:55,679 Speaker 2: many good returns available, but the absolute heart of it 147 00:06:55,720 --> 00:06:59,400 Speaker 2: is a is reduced liquidity that's almost the thing about 148 00:06:59,440 --> 00:07:02,440 Speaker 2: private marketing, as they're not public and the valuations are 149 00:07:02,520 --> 00:07:05,280 Speaker 2: less frequent and in many ways harder. So I'm not 150 00:07:05,640 --> 00:07:08,440 Speaker 2: averse in any means by measures to get that into 151 00:07:08,520 --> 00:07:12,160 Speaker 2: retail portfolios, but there is no you can't pretend that 152 00:07:12,200 --> 00:07:17,440 Speaker 2: it's liquid, So I'm skeptical about people use the term democratization. 153 00:07:17,600 --> 00:07:20,800 Speaker 2: It does raise my eyebrows sometimes because private markets need 154 00:07:20,880 --> 00:07:23,600 Speaker 2: to retain the features of private markets. So I think yes, 155 00:07:23,680 --> 00:07:26,240 Speaker 2: in safe ways, including the long term asset funds, the 156 00:07:26,480 --> 00:07:32,080 Speaker 2: perfectly reasonable part of people's portfolios, but we just need 157 00:07:32,120 --> 00:07:33,720 Speaker 2: to make sure that it's done in a responsible way. 158 00:07:34,040 --> 00:07:35,840 Speaker 1: Okay, Simon, great to have you with us. Thanks very 159 00:07:35,920 --> 00:07:37,440 Speaker 1: much for joining us on the program this morning.