LONDON, June 27 Europe's equity markets have a
vital role to play in the region's economic recovery and
policymakers need to ensure they are regulated in a way that
promotes the long-term investment companies need, the head of
Britain's corporate governance watchdog said on Thursday.
"Equity markets are shrinking before our eyes," Sarah Hogg,
chairman of the Financial Reporting Council, said. "But risk
capital is essential to business, fuelling investment and
economic growth, generating jobs and wealth for future
generations," she said in a speech to the annual conference of
the Federation of European Stock Markets (FESE) in Berlin.
The number of firms listing on stock exchanges globally has
fallen since the financial crisis due to economic and political
The FRC pointed to data from the Organisation for Economic
Cooperation and Development, which showed that the number of new
listings in OECD markets was 650 over the past decade, a 44
percent drop from 1,170 in the decade before.
London Stock Exchange figures showed the number of
listed companies fell more than 20 percent between 2008 and
2012, the FRC said.
The European Commission has already considered how to
develop pools of long-term capital to invest in stock markets
and asked for submissions on the subject during a consultation
period. It is expected to publish the results of the
In its submission, the FRC said the Commission should look
at why investors such as insurers and pension funds are moving
away from equity markets, the costs of investing in stock and
whether there is any legislation that places an unfair burden on
Hogg also said equity markets needed to be regulated to
ensure investors could trust their integrity, but also to ensure
listed companies could attract finance for investment.
She said businesses in other fast growing regions were
seeking a greater share of funds, potentially making it more
difficult for European businesses to access capital.