Rishi Sunak wants to ban suspect firms from FTSE under security plan
07 Oct 2020

Rishi Sunak will take on new powers to block companies from listing on the London Stock Exchange on national security grounds.

The chancellor is understood to be preparing to launch a consultation on the details in the coming weeks in response to demands from MPs. The limitations of the rules were exposed three years ago when the stock exchange listed EN+, an energy company associated with Oleg Deripaska.

The Russian oligarch, accused in the past of having close ties to President Putin, is subject to sanctions by the United States. An investigation revealed that the Financial Conduct Authority was powerless to stop the listing.

In a critical report the Commons foreign affairs committee said that it was not reasonable to expect the City regulator to identify and prevent threats to national security. Instead MPs called on the government to block listings directly.

Sources emphasised that the move was not designed to block any specific companies. The Treasury is instead expected to lay out a series of scenarios in which the powers could be used. These could include the reasonable suspicion that a hostile foreign state was seeking to deliberately undermine the reputation of the London Stock Exchange, a Whitehall official said. A listing could also be blocked if it was judged to potentially help a foreign state to more easily access state and commercial secrets.

Not all listings would be reviewed, the source said. Only a small fraction would be referred to the National Security Council — the body of senior ministers and intelligence chiefs — and Lord Frost, the national security adviser. The final decision would be taken by the security council.

A cabinet minister said that listings could also be denied for companies owned by individuals whose activities could harm British interests — a wider and potentially more controversial definition.

The new powers will almost certainly require primary legislation. Its scope would be determined by ministers after the consultation. Tom Tugendhat, the Conservative MP who chairs the foreign affairs committee, said: “Britain’s markets underpin our economy and our global reach. That’s why we need to be careful who uses them. Dirty money and asset stripping have become a new form of attack on our country.”

In new research conducted by BAE Systems, the defence company, bankers at eight in ten financial institutions admitted that measures to combat money laundering were inadequate and nearly half were unable to identify human trafficking activity.

By Francis Elliott, The Times, 7 October 2020

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