The decline and deregulation of the FTSE

[JohnB]

I knew ARM have decided to list in the US rather than the FTSE, but I didn't realise until I read this Guardian piece that the number of companies listed there has halved to 1097 in 20 years, and flotations down by 2/3 on a similar timescale.

Does this make the FTSE a much less useful general market to invest in, when a FTSE 100 or 350 index tracker could be seen as a general sampling of shares, perhaps with a mining/banking bias. And is the FCA right to slacken the regulations to get companies back?

https://www.theguardian.com/business/20 ... s-fca-says

[mc2fool]

FTSE is a provider of a collection of indices, not a stock market.

The London Stock Exchange is far from unique in having a decreasing number of companies listing on it. It's been a widespread trend for quite a while.

2016: "The number of publicly-traded US companies is down 46% in the past two decades
https://finance.yahoo.com/news/jp-startup-public-companies-fewer-000000709.html

2018: "In 1996, more than 7,400 companies were listed on U.S. stock exchanges; today, that figure is less than half"
https://www.wsj.com/articles/fewer-listed-companies-is-that-good-or-bad-for-stock-markets-1515100040

2020: "The choice of stocks to buy seems limitless — if you think of the Starbucks (SBUX) on the corner, Apple (AAPL) in your pocket or Nvidia (NVDA) chip in your laptop. But the universe of publicly traded companies is shrinking even while their value is soaring — an ongoing stock market trend that's redefining the market and making choosing the right stocks even more essential."
https://www.investors.com/news/publicly-traded-companies-fewer-winners-huge-despite-stock-market-trend/

[mc2fool]

The words “lipstick” and “pig” spring to mind.

In the shrinking U.S. markets they'd say "hog" ....

[XFool]

Does this make the FTSE a much less useful general market to invest in, when a FTSE 100 or 350 index tracker could be seen as a general sampling of shares, perhaps with a mining/banking bias. And is the FCA right to slacken the regulations to get companies back?

https://www.theguardian.com/business/20 ... s-fca-says

Just some more details from that Guardian article on the proposed LSE reforms:

Stock market reforms would ‘pass greater risk to investors’, FCA says

The Guardian

Changes allow US-style ‘golden shares’ that let founders keep control of listed companies for 10 years via special voting rights

"The UK’s financial regulator has warned reforms to stock market listing rules will pass greater risks on to investors in British companies, as it presses ahead with changes designed to reverse a decline in London’s position as a top financial centre.

The Financial Conduct Authority (FCA) on Tuesday night said it plans to abolish the stricter “premium” class of London stock market listing, and make it easier for company founders to keep control of businesses using US-style “golden shares”, among a series of big changes to City regulations."

[Midsmartin]

If listed companies keep buying other listed companies, then you'd expect the number of options to maybe reduce over time, replaced by more mega corporations.

The question to ask would be what proportion of the economy is represented on the stock market over time? Is this too declining, or not?

[PeterGray]

Just some more details from that Guardian article on the proposed LSE reforms:

Stock market reforms would ‘pass greater risk to investors’, FCA says

The Guardian

Changes allow US-style ‘golden shares’ that let founders keep control of listed companies for 10 years via special voting rights

"The UK’s financial regulator has warned reforms to stock market listing rules will pass greater risks on to investors in British companies, as it presses ahead with changes designed to reverse a decline in London’s position as a top financial centre."

This looks very questionable. Trying to encourage additional business at the cost of shareholders losing power and taking on more risk. It's hardly the path to creating a reputable, long term business!

[ursaminortaur]

Just some more details from that Guardian article on the proposed LSE reforms:

Stock market reforms would ‘pass greater risk to investors’, FCA says

The Guardian

Changes allow US-style ‘golden shares’ that let founders keep control of listed companies for 10 years via special voting rights

"The UK’s financial regulator has warned reforms to stock market listing rules will pass greater risks on to investors in British companies, as it presses ahead with changes designed to reverse a decline in London’s position as a top financial centre."

This looks very questionable. Trying to encourage additional business at the cost of shareholders losing power and taking on more risk. It's hardly the path to creating a reputable, long term business!

Apart from golden shares one other major change would be no longer requiring shareholder votes on acquisitions and related party transactions which sounds like setting things up for future scandals.

Other changes include removing a requirement for shareholder votes on acquisitions and related party transactions – which had been seen as a barrier to listing by some companies – and the removal of rules requiring startups to earn revenues for three years before listing.