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Index provider FTSE Russell said on Monday that shares priced in currencies other than sterling will be added to its UK indices, as it attempts to boost the British stock market’s appeal to global investors.
FTSE Russell, which is owned by the London Stock Exchange Group and manages the blue-chip FTSE 100 and mid-cap FTSE 250, said securities trading in dollars and euros, for example, would be “considered for potential inclusion” to the FTSE UK index series from September. Only securities trading in pounds are currently eligible.
The pivot marks the latest in a series of changes by the British government, regulators and others to City of London rules that are meant to boost the UK stock market’s attractiveness.
Shares listed on major indices benefit from greater inflows from passive investment funds, which track markets rather than actively pick stocks.
Mark Austin, a partner at law firm Latham and Watkins, who has been pushing for the change by FTSE Russell, said the announcement was a small but very important change for UK capital markets.
“Being able to list in London and have a euro or a dollar share price and still be eligible for FTSE UK index inclusion is a potential game changer,” he added.
“There are a number of large international companies who are thinking about where to list for who this will be a key consideration.”
Neil Birrell, chief investment officer at Premier Miton, an investment firm, said FTSE Russell’s announcement “appears to be an attempt to reinvigorate UK capital markets”.
But he added the move “looks more like a free giveaway than anything that will have any impact whatsoever on companies hoping to list in the UK”.
Efforts to establish London as a vibrant hub for global equities have been hit by an exodus of stocks recently, with gambling company Flutter, building materials group CRH and construction equipment rental group Ashtead opting to shift their primary listings to the US.
Mining group Glencore last month became the latest FTSE 100 company to state it was considering ditching its London listing, paving the way for a potential move to New York.
Fewer than 20 companies listed in London in 2024, the lowest number of additions to the UK stock market since the financial crisis in 2009.
A total of 88 companies delisted or transferred their primary listing from London’s main market last year, with only 18 taking their place, according to LSEG data.
Shareholders have said companies that list in the US benefit from a deeper pool of investors and higher valuations.
The UK stock market, which is dominated by banks, mining and oil companies, has significantly underperformed the US in recent years as investors bought shares in fast-growing Silicon Valley technology companies.
But the FTSE 100 is trading at a record high, having added 8.4 per cent this year, partly due to investors cutting their holdings of US tech stocks. The S&P 500 has added just 0.5 per cent this year.
