Another year draws to a close; One which has seen yet more political turmoil and mounting economic headwinds, though there was some optimism concerning capital market reform in the UK. Whether this will be sufficient to ensure London can reclaim its title as a listing venue of choice remains to be seen, but against a gloomy backdrop, it at least offers some cause for cheer. We thought a quick round-up of some of 2022’s major events would make a good way to conclude the year.
January – SONIA replaced LIBOR as the risk-free rate reference for UK lenders. That move stemmed from the LIBOR rigging “scandal” in the 2008 global financial crisis – although after US courts took a rather different view, questions are being raised over whether the legal emphases pursued in the cases were flawed.
February – war returned to Europe after Russia invaded Ukraine. Russia was cut off from Western markets, gas prices surged, accelerating already mounting inflation problems in many countries.
March – the FCA’s response to the consultation it had been running as part of the Wholesale Markets Review was published. Critically, HM Treasury is looking to bolster the UK’s competitive position in financial services.
April – Earth Day, and the topic of ESG investing has been very much front of mind during 2022. Perhaps not always for the right reasons, whether that’s senior bankers suggesting that their risk time horizons simply don’t need to account for environmental risks more than a decade out, or regulators clamping down on greenwashing of ESG products, but the debate – and hopefully a quest for quality – seems set to continue for a while yet.
May – The FCA set out its vision to attract more high-quality, growth companies to the UK, with the regulator proposing various initiatives which reflect that UK listings rules haven’t changed since the 1980s. The open conversation is to make sure the rule book is fit for the future and makes the domestic market both accessible and competitive.
June – Was this the tipping point for financial market confidence? Walgreens pulled the plug on a planned auction for its Boots chemists division, citing unexpected and dramatic changes in underlying markets. It would certainly explain the poor IPO run seen this year.
July – The Bank of England, the Prudential Regulation Authority and FCA set out potential measures to oversee and strengthen the resilience of services provided by critical third parties to the UK financial sector.
September – After a protracted contest leaving the country in political limbo as energy prices spiralled, a new Prime Minister was finally appointed. That was followed shortly after by the sad news that Her Majesty Queen Elizabeth II had passed, aged 96.
October – The new UK government spooked global markets with its spending plans, Liz Truss wasn’t long in the job and took the title of having the shortest tenure as Prime Minister. Her replacement Rishi Sunak did however afford some global confidence in the UK and The Pound, as well as bringing more cordial relations with the Bank of England. The slowdown in UK IPO activity was underlined by a report from UHY Hacker Young that just one listing came to market over the quarter, valued at £3m.
November – IPO chatter resurfaced with the introduction of FCA regulatory reform and results from the US mid-term elections. The LSE has indicated that the FCA’s proposed reform of capital markets will likely have a positive impact on IPO activity in the near future.
December – We don’t have a crystal ball, but Ireland’s adoption of the latest elements of CSDR and other regulatory reforms could have a significant impact on capital markets. Any new securities issuance undertaken from next year must be in an electronic format, with existing listed securities dematerialised by 1st Jan 2025. Avenir’s technology is ready to support our Irish issuers who need this functionality and we’ll be extending the functionality to UK issuers when the regulations eventually catch up.
Falisha Wright, Business Development Executive, Avenir Registrars
This article originally appeared in the December 2022 version of AIM Journal. You can download a printable version here.