Pension funds take aim at London Stock Exchange
A group of local council pension funds has launched a fresh attack on the London Stock Exchange (LSE) for what it sees as a push to lower boardroom standards for listed firms. The Local Authority Pension Fund Forum (LAPFF), representing 87 local authority schemes, expressed concerns about Dame Julia Hoggett, the stock exchange boss, and her recent efforts to reform listing rules.
Dame Julia, who also heads the Capital Markets Industry Taskforce (CMIT), has been at the forefront of resisting attempts to strengthen the UK’s corporate governance code. This includes the scrapping of proposed rules for companies to report on Environmental, Social and Governance (ESG) metrics. She has highlighted her discontent with the lower pay for chief executives on the LSE compared to the US, raising fears that governance rules on pay could be diluted.
In a letter dated August 30, LAPFF chairman Doug McMurdo reiterated the forum’s steadfast stance, stating that the push lacks the necessary analysis and evidence to withstand market scrutiny. This marks the third time that LAPFF, managing £350 billion of assets, has raised these concerns.
On the other hand, the CMIT argues that relaxing listing rules will make London a more appealing choice for company founders looking to go public, as opposed to other markets like New York. The LSE has been criticized for the decline in companies listing in London, particularly after Arm, a British microchip company, opted for the US market in 2023.
Mr McMurdo emphasised that the cost of capital is determined by investors, not lawyers or the sell-side, criticising the CMIT for not representing these crucial interests. He condemned the conduct surrounding governance of capital markets, calling it a case study of what should not be done.
The LSE Group has been approached for comment on this matter.