SEC reforms tipped to ‘turn on the tap' for London Stock Exchange
Under ideas circulated by the Securities and Exchange Commission (SEC), foreign companies that are quoted in New York could be required to have a secondary listing in another location if they aren't already listed elsewhere.
This demand, if enacted, could affect prominent companies including Arm, the Cambridge-based chip designer that is listed in New York.
Foreign companies could also be subject to American accounting rules, which might have the effect of forcing them to move their entire domicile to the US.
Lawyers at the global legal firm DLA Piper said the work under way at the SEC could 'turn on the tap' for London to attract secondary listings from these so-called foreign private issuers (FPIs). This would lift the London Stock Exchange, which has faced criticism for losing out on initial public offerings (IPOs) to New York. It has also been deserted by a number companies that have switched their listings to America in the quest for higher valuations.
• How to save London's stock market, by LSE boss David Schwimmer
Companies using the FPI rules are not subject to quarterly reporting requirements and can use international accounting standards to retain their New York listings. However, the SEC said it had devised these rules decades ago on the basis that they would be 'subject to meaningful disclosure and oversight in their home jurisdictions'.
Before 2003, the vast majority of FPIs were European and subject to oversight by their domestic regulator. But 20 years later, the largest jurisdiction in terms of 'issuer incorporation' was the Cayman Islands, and the largest by headquarters was China, the SEC said.
Rob Newman, co-head of capital markets for DLA Piper in the UK, said that if the changes were implemented, there could be repercussions for a wide range of companies. 'What we're talking about is companies [like] Arm Holdings, which chose to list in New York, doesn't have its stock traded anywhere else, and is currently relying on exemptions of being a foreign private issuer,' he said.
Another company to take advantage of the FPI regime has been Virax Biolabs, a Glasgow-based biotech company that listed its shares on Nasdaq after incorporating in the Cayman Islands.
In a letter to the SEC, Virax Biolabs' chief executive, James Foster, said: 'Our company was advised by our underwriter at the time of IPO to incorporate in the Cayman Islands as a means to facilitate a US listing. Our operational headquarters, executive leadership and business administration have always been located in the United Kingdom. We would not have adopted the Cayman structure but for this advice.'
The SEC has asked for responses to its consultation by early September. It is unclear when it would make any rule changes.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
20 minutes ago
- Reuters
EU's $250 billion-per-year spending on US energy is unrealistic
BRUSSELS/HOUSTON, July 28 (Reuters) - The European Union's pledge to buy $250 billion of U.S. energy supplies per year is unrealistic because it would require the redirection of most U.S. energy exports towards Europe and the EU has little control over the energy its companies import. The U.S. and EU struck a framework trade deal on Sunday, which will impose 15% U.S. tariffs on most EU goods. The deal included a pledge for the EU to spend $250 billion annually on U.S. energy - imports of oil, liquefied natural gas and nuclear technology - for the next three years. Total U.S. energy exports to all buyers worldwide in 2024 amounted to $318 billion, U.S. Energy Information Administration data showed. Of that, the EU imported a combined $76 billion of U.S. petroleum, LNG and solid fuels such as coal in 2024, according to Reuters' calculations based on Eurostat data. More than tripling those imports was unrealistic, analysts said. Arturo Regalado, senior LNG analyst at Kpler, said the scope of the energy trade envisioned in the deal "exceeds market realities." "U.S. oil flows would need to fully redirect towards the EU to reach the target, or the value of LNG imports from the US would need to increase sixfold," Regalado said. There is strong competition for U.S. energy exports as other countries need the supplies - and have themselves pledged to buy more in trade deals. Japan agreed to a "major expansion of U.S. energy exports" in its U.S. trade deal last week, the White House said in a statement. South Korea has also indicated interest in investing and purchasing fuel from an Alaskan LNG project as it seeks a trade deal. Competition for U.S. energy could drive up benchmark U.S. oil and gas prices and encourage U.S. producers to favour exports over domestic supply. That could make fuel and power costs more expensive, which would be a political and economic headache for U.S. and EU leaders. Neither side has detailed what was included in the energy deal - or whether it covered items such as energy services or parts for power grids and plants. The EU estimates its member countries' plans to expand nuclear energy would require hundreds of billions of euros in investments by 2050. Its nuclear reactor-related imports, however, totalled just 53.3 billion euros in 2024, trade data shows. The energy pledge reflected the EU's analysis of how much U.S. energy supply it could accommodate, a senior EU official said, but that would depend on investments in U.S. oil and LNG infrastructure, European import infrastructure, and shipping capacity. "These figures, again, are not taken out of thin air. So yes, they require investments," said the senior official, who declined to be named. "Yes, it will vary according to the energy sources. But these are figures which are reachable." There was no public commitment to the delivery, the official added, because the EU would not buy the energy - its companies would. Private companies import most of Europe's oil, while a mix of private and state-run companies import gas. The European Commission can aggregate demand for LNG to negotiate better terms, but cannot force companies to buy fuel. That is a commercial decision. "It's just unrealistic," ICIS analysts Andreas Schröder and Ajay Parmar said in written comments to Reuters. "Either Europe pays a super high non-market reflective price for U.S. LNG or it takes way too much LNG volumes, more than it can cope with." The United States is already the EU's top supplier of LNG and oil, shipping 44% of EU LNG needs and 15.4% of its oil in 2024, according to EU data. Raising imports to the target would require a U.S. LNG expansion way beyond what is planned through 2030, said Jacob Mandel, research lead at Aurora Energy Research. "You can add on capacity," Mandel said. "But if you're talking about the scale that would be necessary to meet these targets, the $250 billion, then it's not really feasible." Europe could buy $50 billion more of U.S. LNG annually as supply increases, he said. The EU has said it could import more U.S. energy as its plan advances to end Russian oil and gas imports by 2028. The EU imported around 94 million barrels of Russian oil last year - 3% of the bloc's crude purchases - and 52 billion cubic metres (bcm) of Russian LNG and gas, according to EU data. For comparison, the EU imported 45 bcm of U.S. LNG last year. Higher EU fuel purchases would, however, run counter to forecasts for EU demand to decline as it shifts to clean energy, analysts said. "There is no major need for the EU to import more oil from the U.S., in fact, its oil demand peaked a number of years ago," Schröder and Parmar said. ($1 = 0.8571 euro)
Reuters
22 minutes ago
- Reuters
Exclusive: Cadence to plead guilty and pay $140 million to US for China sales
July 28 (Reuters) - Cadence Design (CDNS.O), opens new tab agreed to plead guilty and pay more than $140 million to resolve U.S. charges for selling its chip design products to a Chinese military university believed to be involved in simulating nuclear explosions, the Justice Department said on Monday. Cadence was accused of violating export controls by illegally selling chip design software and hardware to front companies representing China's National University of Defense Technology. NUDT's supercomputers are thought to support nuclear explosive simulation and military simulation activities, according to U.S. Commerce Department notices restricting shipments to the university. San Jose, California-based Cadence noted a charge related to the legal proceedings in its quarterly results, also released on Monday. Cadence shares rose 7.8% after it posted the news and its quarterly results. The deal, which comes as the U.S. and China meet for new trade talks, shows the U.S. is still willing to enforce U.S. export controls on China, even as it relaxes some of the restrictions as part of negotiations. NUDT was put on the Commerce Department's restricted trade list in 2015 to keep it from using U.S. technology to power its supercomputers, according to department postings. Other aliases and locations were added to the university's listing in 2019 and 2022, including Hunan Guofang Keji University, Central South CAD Center, and CSCC. The U.S. investigation into Cadence, which began more than four years ago, involved 'historical sales by Cadence to customers in China,' according to a company filing. Cadence received a subpoena from the U.S. Commerce Department in February 2021, demanding records related to certain customers in China. A related November 2023 subpoena followed from the Justice Department over the company's business activity in China. Entities are placed on the restricted trade list, formally known as the entity list, for activities deemed contrary to U.S. national security or foreign policy interests. U.S. companies are not allowed to ship goods and technology to them without licenses from the Commerce Department, which are generally denied. Cadence will hold a call about its second-quarter financial results at 2 p.m. Pacific Time (2100 GMT) on Monday. Cadence, whose customers include major semiconductor manufacturers and companies such as Nvidia and Qualcomm, is known for its electronic computer-aided design software. Electronic design automation (EDA) tools are key to designing chips and verifying that they are bug-free. NUDT has developed chips to power university supercomputers, including Tianhe-2, once touted as the world's best supercomputer, which the U.S. believes has been used in research on or the development of nuclear explosive devices. Twelve percent of Cadence's revenue came from China last year, down from 17% in 2023, amid regulatory developments and geopolitical tensions.
Daily Mail
22 minutes ago
- Daily Mail
Chaos at major airline as 270 pilots grounded and 140 demoted... sparking fears for holiday travel
Airlines were supposed to rake in record profits in 2025. Instead, another company is cutting hundreds of staffers. Spirit Airlines said on Monday it will furlough about 270 pilots while demoting another 140. It's the latest major move from the cash-strapped budget carrier, as it looks to scale down its workforce, downsized schedule, and return to profitability. The furloughs will go into effect on Nov. 1, while designation downgrades for captains will take place on Oct. 1, the company told Reuters in an emailed statement. 'We are taking necessary steps to ensure we operate as efficiently as possible as part of our efforts to return to profitability,' the airline said. The announcement, first reported by Bloomberg News, comes as Spirit tries to overhaul its business to move away from its no-frills image and rebrand as a premium airline. The Florida-based carrier had filed for bankruptcy protection last November, following years of losses, heavy debt, and failed merger attempts. It emerged from bankruptcy in March. 'Spirit continues to shrink, and with it, the value of pilot seniority and Spirit careers continues to erode,' said Captain Ryan Muller, chairman of the Spirit unit of the Air Line Pilots Association, adding that this marks the third round of pilot furloughs and downgrades since September 2024. The union said it is working on a third Furlough Mitigation Memorandum of Understanding to pursue voluntary options to reduce the scope of the furloughs and preserve pilot careers.
