By Huw Jones
LONDON, March 8 (Reuters) - Britain's finance ministry
said on Wednesday it will launch a review into how investor
research on companies could be improved to attract more
listings, a step that follows a decision by UK chip designer Arm
Ltd to only list in New York.
The Investment Research Review will be launched next Monday
and chaired by Rachel Kent, a veteran financial services lawyer
at Hogan Lovells, who will report back to City minister Andrew
Griffith within three months, the ministry said.
"It seeks to develop concrete steps the government can take
to enhance London's status as Europe's leading listings
destination, and only second globally," the ministry said.
Griffith will give more details in a speech to the FIX
trading conference in London on Thursday.
Investors use research from analysts at banks and brokers
for picking stocks, but concerns have been raised about the
quality and quantity of research produced in Britain,
particularly for tech and life sciences, the ministry said.
There is a worry this could dampen valuations and the
attractiveness of London as a place to raise capital. Firms
often list on Nasdaq or ICE in New York given higher valuations
for tech firms there.
"Research matters - and the right depth and breadth of
investment research is vital to ensure markets operate well and
companies obtain the valuations they deserve," Griffith said in
the ministry statement.
The review will look at whether rules inherited from the
European Union which "unbundle" research, meaning its cost is
separately itemised from other activities like executing stock
trades to end conflicts of interest, has had any impact on the
amount of UK investment research or the breadth of coverage.
An EU review found that unbundling had no significant impact
on the number of analysts.
Earlier on Wednesday, Britain's Financial Conduct Authority
said multiple factors were at play to influence Arm's decision.
The review is part of the "Edinburgh Reforms", which trailed
the research review as part of a package to reform financial
rules to exploit Britain's freedom to write its own regulations
now that is has left the European Union.
(Reporting by Huw Jones;Editing by Elaine Hardcastle)
Messaging: huw.jones.thomsonreuters.com@reuters.net))
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