Baroness Hogg, chairman of the Financial Reporting Council (FRC) said plans to relocate the UK Listing Authority would create “synergies” but has warned against any cost savings.
Lady Hogg, responded positively to plans to bring the UK Listing Authority under the FRC, in a week which has seen criticism heaped upon the proposal by the London Stock Exchange.
She believes the work of the UK Listing Authority chimes well with the work of the Financial Reporting Review Panel, which sits within the FRC and overseas the integrity of published accounts.
She was keen to stress the move was a government proposal and had not originated from within the FRC.
“This is not our idea, it is the government’s idea, but we’ve responded to it positively,” she told Accountancy Age.
“It’s a very good fit in that a lot of [the UKLA’s] work has synergies with the work of the Financial Reporting Review Panel. The FRRP is looking at accounts and, in a way, what companies put to markets in their prospectuses, the follow on is what happens in their accounts a year or two later.”
She believes the move would bring the UK Listing Authority back to the position it held prior to being absorbed into the Financial Services Authority (FSA).
“You have to remember that the UKLA only went into the FSA not that long ago and at that stage there was great concern that it would come further away from the market through that process,” she said.
“So, if you like, moving back to us would be a bit of a journey back where it came from, but perhaps not all the way.”
She was, however, cautious when asked about cost savings.
“I’m always cautious about arguing that there will be cost synergies from bringing things together, so nonetheless you ought to be able to have types of support that spread across two organisations quite effectively,” she said.
“I do stress this is not an argument we have put forward or invented, it is one the government has put forward and we have responded positively too. I can see arguments on both sides, but I can see some useful synergies.”
In the last week the LSE has railed against the proposal fearing it would damage the city of London’s global competitiveness.
Xavier Rolet, CEO of LSE, believed the move would “durably and severely damage the competitiveness of London’s IPO market”.
“We care deeply about the competitiveness of the UK’s IPO market. Its regulation requires experience on a global scale, sophisticated real-time monitoring and response capabilities and, crucially, the ability to fight London’s corner in Europe, and in particular at the new Paris-based European Securities and Markets Authority, which has now been granted binding regulatory powers on the securities markets of its 27 members, including the UK,” he said.
“The FRC would be unable to provide these requirements. If the UK Listing Authority was merged with the FRC, it would durably and severely damage the competitiveness of London’s IPO market.”
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