MPs demand explanation from FCA on Saudi Aramco proposals

The Financial Conduct Authority’s decision to open a new premium category to accommodate a London listing for Saudi Aramco has drawn criticism from MPs, who have asked for an explanation of the decision.

Nicky Morgan and Rachel Reeves, the chairs of the Treasury committee and Business, Energy and Industrial Strategy committee respectively, have written a letter to FCA chief executive Andrew Bailey calling for clarification on the issue.

The FCA recently proposed an amendment to the listing system whereby a new category would be created for companies controlled by state entities, which is widely seen as an attempt to attract a listing from the Saudi oil giant.

Aramco is considering options for the flotation of 5% of its business, which is estimated to be worth around $2trn.

There are concerns that opening up this new category would leave private investors unprotected from the might of foreign sovereign company owners.

"It would be helpful to understand the background to this consultation: to what extent was the FCA aware of any interest shown by Saudi Aramco in obtaining a UK listing, and if known, how far that interest influenced the consultation?" Morgan and Reeves asked in the letter.

Morgan added that it was important that the UK upheld its reputation as being strong on corporate governance.

"The FCA must protect this reputation, especially as the City looks to remain competitive and thrive post-Brexit," she said.