The London Stock Exchange (LSE) is encountering renewed backlash from a coalition of local council pension funds regarding its recent initiative to relax boardroom regulations for publicly listed enterprises. The Local Authority Pension Fund Forum (LAPFF), which advocates for 87 local council funds, has publicly voiced its disapproval of the modifications suggested by the exchange’s CEO, Dame Julia Hoggett. The LAPFF has consistently raised its concerns over standards of corporate governance.
In particular, the organization is apprehensive about Dame Julia’s ambitions to alter listing regulations, fearing they might diminish standards within the boardrooms. Dame Julia, who also represents the Capital Markets Industry Taskforce (CMIT)—an industry group that opposes stricter enforcement of the UK’s corporate governance guidelines—has recently dismissed proposals that would require firms to disclose their Environmental, Social, and Governance (ESG) performance. These suggested regulations were abandoned earlier this year.
Moreover, Dame Julia has openly contended that CEOs on the stock exchange receive inadequate compensation in comparison to their U.S. equivalents, raising concerns that governance rules concerning executive pay might be relaxed.
LAPFF voices dissent against LSE boardroom policies
Doug McMurdo, the LAPFF’s chair, reproached the initiative in a correspondence dated August 30. He indicated that the proposed modifications lacked adequate analysis and evidence to withstand financial scrutiny. This letter represents the third grievance from the forum, which oversees £350 billion in assets, regarding this issue.
In spite of these critiques, the CMIT maintains that relaxing listing requirements will encourage more entrepreneurs to favor London over other markets such as New York for their initial public offerings. The stock exchange has faced considerable criticism due to the scarcity of new listings in London, especially after the UK microchip company Arm opted for a U.S. listing in 2023. In response, McMurdo stressed that capital costs are determined by market investors, not by legal professionals or sell-side interests, which he believes have been disproportionately represented by the CMIT.
The firm stance of the LAPFF highlights the ongoing conflict between nurturing a competitive market landscape and upholding strict governance protocols. The LSE Group has been contacted for a statement.
