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New Rules Proposed by FCA for Aiding Saudi Aramco Listing on LSE

New Rules Proposed by FCA for Aiding Saudi Aramco Listing on LSE

Financial Conduct AuthorityThe Financial Conduct Authority (FCA) which is a UK based regulatory body has proposed a new set of rules this week. It will enable the sovereign state-owned companies like oil giant Saudi Aramco for getting listed on London Stock Exchange (LSE). As per the UK regulator, this new proposal will help in expanding the role of London in the global markets.

The controversial IPO of Saudi Aramco which is evaluated at $2 trillion is slated to be the biggest in the history of IPO. The Saudi government is making plans to list 5% shares of Aramco’s at this stage in New York or London. It seeks a premium listing in London but is facing problems because of some regulatory rules that prohibit a premium listing until and unless minimum 25% of the stock is available for sale.

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The premium listing has got the final approval from the regulators that the company has the highest standards possible regarding the corporate governance.

In FCA’s latest proposal, it has suggested that a new premium listing category should be created for the sovereign controlled companies. In spite of FCA’s insistence that the new rule is not targeted at Saudi Aramco sale, no other applicable case has been mentioned.

Andrew Bailey who is the Chief of FCA has made the following statement:

Refining the listing regime in this way would make UK markets more accessible while ensuring that the protections afforded by our premium listing regime are focused and proportionate. Sovereign owners are different from private-sector individuals or companies — both in their motivations and nature.  Investors have long recognised this and capital markets are well adapted to assess the treatment of other investors by sovereign countries.

Public consultation on the new proposal is likely to run until October, and as per FCA, additional documents that mention the details of the plan will be issued later on. London is aggressively pushing for the IPO since it would reap fortunes for lawyers, banking firms and other related businesses.

According to Saudi Aramco, it has not made any final decision where to get itself listed. It is only by late 2018 that the IPO will be launched. The 5% float will be around 78 billion Pound or $100 billion in value. The royal family of Saudi is looking forward to expanding its economy for moving away from their over-dependence on oil.

While some different fund managers in London have expressed their opinions that rules are being bent for a single company. Some are saying that the new rules indicate that London was open for global business. The London Stock Exchange Group has expressed their support through a statement that investors’ discretionary access was pivotal to the success of UK markets and London’s role as a global financial hub.

Ed Lamadrid

Ed Lamadrid

I'm Ed Lamadrid, a CPA, blogger and a forex trader. Welcome to Top10FX.net. Follow my website for the most trustworthy forex broker reviews and last minute financial trading news.

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