LONDON, July 10 (Reuters) – British Finance Minister Jeremy Hunt has launched a proposal to open up at least £50 billion ($64 billion) for investment to strengthen London as a competitive global financial centre. .
The so-called Mansion House reform is part of a plan launched last year to capitalize on Britain’s freedom to set its own financial rules after Brexit.
Why should annuities matter?
The Treasury believes some of the billions of pounds in pension funds currently invested in safe haven assets such as government bonds would yield better returns for savers if invested in private start-ups.
Companies listed on the London Stock Exchange’s AIM and Aquis Exchange Growth Markets are also eligible.
One aim is to redirect pension cash to start-up fintechs, life sciences and other growth companies, but not infrastructure or real estate, in the UK and not in New York like chip designer ARM. It is to expand the scale and be able to go public.
The pension sector is highly fragmented and the UK is trying to imitate countries such as Australia and Canada, where pension funds have merged to create bigger companies with more investment power, possibly through forced mergers.
Nine pension companies operating in the UK have agreed to a voluntary agreement to invest 5% of their funds in growth companies by 2030 over the next 12 months.
Many savers in direct contribution pension funds are years away from retirement, making it easier to make changes now without jeopardizing their pensions.
The UK will also consider whether new instruments need to be created as alternative routes for its plans to invest in the private market.
What is unbundling?
The government said it would consider scrapping “unbundling” rules inherited from the EU. The bill would require banks to be clear about how much they charge asset managers for stock selection and other company surveys.
Previously, the fee was “bundled” with the transaction execution fee.
Critics blame the rule for fewer investigations and fewer listings of small businesses. However, market trade body AFME said the rule was the cause of the lack of research and found no evidence that the downward trend in listings was pre-existing before the 2018 rule.
The survey proposes a new research platform as a one-stop-shop for businesses looking for research professionals.
Why a new trading platform?
The proposed intermittent trading venue is due to be launched in 2024 by the London Stock Exchange.
The Treasury Department said it would be the first in the world to bridge the gap between listed public markets and private companies.
By auctioning shares, private companies could grow privately and avoid the regulatory burdens of going public and being sold to larger rivals.
How can it be easier to buy stocks?
Britain plans to make stock trading more efficient by ending the use of paper trails for official trading records.
EU-derived restrictions on where investors can trade shares around the world will be removed, and the prospectuses companies use to market their stocks and bonds will be simplified.
The government plans to hold public consultations on some of its pension reform proposals, but regulators already have powers to implement other changes, such as inspection rules.
Britain is set to hold national elections next year, and the opposition Labor Party is expected to lead in polls. Labor officials have backed some of the Conservative government’s policies, including long-overdue pension reform.
(1 dollar = 0.7822 pounds)
Reported by Huw Jones.Editing: Mark Heinrich
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