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FCA boss defends regulator’s role in Arm IPO snub

Nikhil Rathi, image credit:

The Financial Conduct Authority (FCA) has defended its role in the failed attempt to convince the Cambridge-based semiconductor designer Arm to IPO in London.

The destination of the IPO for Arm, which is owned by the Japanese conglomerate SoftBank, has been the subject of considerable attention from UK politicians including Prime Minister Rishi Sunak, who have lobbied to persuade Arm to return to the London Stock Exchange.

Arm ultimately decided to go with New York for its upcoming IPO, which has led to the FCA facing criticism after some pointed to regulatory restrictions as a factor behind the rebuff.

Speaking to the Treasury Select Committee, FCA boss Nikhil Rathi acknowledged the blow to the London Stock Exchange was unfortunate, however, he made clear that the regulator had made every effort to accommodate the company’s needs.

“In the case of Arm, we were aware, and the government indicated to us that this was a company of national importance,” Rathi told the committee.

“And therefore, we engaged to look at our rules where there was a case for making modifications and where that evidence was presented to us.”

The FCA in February had stated it would consider relaxing certain listing requirements to make London a more attractive option for Arm.

Rathi said the reason behind Arm’s decision was beyond just the requirements from the financial watchdog. But now that the decision has been made, it has posed a question of how “we are prioritising the development of our capital markets in broader public policy”.

Rathi said: “When Arm was taken over by SoftBank in 2016, the takeover panel applied certain conditions… retention of a capital market nexus in the UK was not one of the conditions.”