The Financial Conduct Authority (FCA) is considering a rule amendment that would relax listing requirements on the London Stock Exchange in a move to entice the chip company Arm to IPO in the city.
Various parties in the UK, including Prime Minister Rishi Sunak, have been attempting to convince the Cambridge-based semiconductor designer to pick London as its IPO destination over New York or elsewhere.
As reported by The Times, Arm is concerned with some of the regulatory requirements of the London Stock Exchange, specifically the rule that would force the company to report on any dealings with Arm’s parent company SoftBank.
The policy exists to prevent conflicts of interest and fraud from going undetected. Despite this, the FCA is in talks with Arm has said it would consider waiving certain requirements to the company, should it list in London.
However, the potential rule bend has already caused some backlash from those that have long-admired the UK’s robust regulatory framework.
The Institute of Directors (IoD), a lobby group in the city, has warned the FCA that the offer to bend the rules “undermines the integrity of both the rules themselves and the UK’s wider governance framework”.
Roger Barker, director of policy and corporate governance at the IOD said “there is a real danger in watering down established governance rules in order to win specific transactions.”
He said: “In the long term, good corporate governance is best served by the consistent and fair application of sensible listing rules that protect investors and other stakeholders.
“The UK should not endanger its hard-won reputation for high governance standards by engaging in a regulatory race to the bottom.”
Arm is one of four UK tech companies that could see a 2023 IPO.