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MPs grill City watchdog on Saudi Aramco game plan

The chair of the Treasury Select Committee has warned the City watchdog to tread carefully as it reaches the end of a consultation into IPO rules aimed at attracting the world's biggest listing in history. 
Treasury chair Nicky Morgan MP and Rachel Reeves MP, the chair of the business, energy and industrial strategy committee, have written to the Financial Conduct Authority with a series of questions over its proposals to tweak listing rules for state-controlled companies. 
The City watchdog suggested adjusting rules for lucrative companies such as oil giant Saudi Aramco in July, the aim being to attract a slice of Aramco's ?1.6 trillion float when it lists next year. A consultation on its proposals is due to end next month. 
In a letter dated Sept 5, Ms Morgan and Ms Reeves said they wanted to "explore the rationale for this consultation, particularly given the concerns expressed by stakeholders that these proposals would weaken protection for private investors against interference from foreign sovereign company owners". 
Addressed to FCA chief executive Andrew Bailey, they asked a string of questions on the process including how far Aramco's interest influenced the proposals, if at all, and when the Government was first made aware of them. 
MPs grill City watchdog on Saudi Aramco game plan

Saudi Aramco's float is set to be the biggest IPO is history, with stock exchanges around the world vying for a slice of the listing
Their attention focused on the FCA's suggestion that a new category for state-controlled companies should be created under its premium listing regime, a plan that has already sparked backlash from the Institute of Directors and the UK's investor community
"Any changes mustn’t dilute the protection afforded by the ‘premium listing’ brand," Ms Morgan warned. "The UK has a world-class reputation for upholding strong corporate governance. The FCA must protect this reputation, especially as the City looks to remain competitive and thrive post-Brexit." 
The letter emerges a month after London Stock Exchange boss Xavier Rolet defended plans to change UK listing rules in order to attract companies such as Saudi Aramco onto the exchange.
"It should be a surprise to no-one if listing rules are from time to time refreshed by the regulator to take into account the reality that we live in," he said, refusing to comment specifically on the Aramco float. 
The Saudis' plan to sell only 5pc of the oil giant has also been criticised because the regulator usually blocks a premium listing unless at least 25pc is sold. However Mr Rolet highlighted last month that this was more of a liquidity test than a hard and fast rule. 
Nevertheless, the FCA's consultation has stirred up debate at a time when the City is fighting to retain its reputation as a key financial hub, something both Ms Morgan and Ms Reeves reiterated on Friday.  
“As we leave the European Union, it’s important the UK seizes new opportunities for business but it should not be at the expense of diminished corporate governance standards," Ms Reeves said. "Getting this balance right will be vital to the UK’s long-term future as a key financial centre." 
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