London Stock Exchange boss backs rule overhaul plan targeting Saudi float

The London Stock Exchange boss today defended a controversial rule change proposal aimed at luring Saudi Aramco’s $2 trillion (£1.5 trillion) oil mega-float to London.

Xavier Rolet, the 57-year-old chief executive, hit out at critics who have questioned a proposed shake-up of London’s financial centre, saying it must “keep up with the times”.

The Financial Conduct Authority has proposed watering down listing rules for sovereign-controlled entities, which is widely seen as a means to help the Saudis to come to London.

“We need to adjust to reality and that’s all that’s happening,” Rolet (pictured) said. “I’m not sure why there’s so much focus on this particular point. It should be a surprise to no one if listing rules are from time to time refreshed by the regulators to take into account the reality we live in.” Rolet accompanied Prime Minister Theresa May on a trip to woo the Saudis in April.

He declined to comment on Saudi Aramco and a possible float explicitly but said all the rule changes were in the hands of the City regulator, which is consulting on the plan.

The Institute of Directors and pension fund manager Royal London criticised the FCA’s proposals to create a new category of share listing for state-owned companies. They say if London wins a battle to help Saudi Aramco list 5% of the company on the stock market it will damage governance standards.

Many assume 25% of shares must be listed to meet governance rules but Rolet said there was “a basis lack of understanding” of listing rules. “There is no 25% rule in terms of governance to have access to the premium market. There’s a liquidity test,” he added.

Companies which have floated on the main market with less than 25% include Glencore, which floated in London with 15% of shares on offer to outside investors.

Big stocks like Facebook and Alibaba have also sold tiny portions of shares and listed in the US market.

“These have received very substantial investment from UK-based institutions. It proves the point that 25% is not a governance test, it’s simply a liquidity test,” Rolet said.