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
The Guardian
28 minutes ago
- The Guardian
Wall Street delighted with Microsoft as it spends $100bn on AI
Microsoft, the world's second-most valuable company, is dumping enormous sums of money into its artificial intelligence efforts. At the same time, the company is earning money hand over fist. Investors are thrilled. The enterprise software giant reported fiscal fourth-quarter results that exceeded expectations on Wednesday as the company races to acquire data centers and talent, which continue to be investigated by investors. The company predicted its capital expenditure for the next fiscal year would top $100bn, a 14% increase from the year prior. It's the fifth quarter in a row that Microsoft has beaten Wall Street's expectations. Shares in the company, which is celebrating its 50-year anniversary since it was founded by Bill Gates and Paul Allen in Albuquerque, New Mexico, in April 1975, are trading a near record of $513, up 22% since the start of the year. The software giant's stock rose more than 7% in extended trading Wednesday. Microsoft, like rivals Alphabet/Google and Amazon, is in an all-out race for data center capacity to meet demand for AI. Last week, Alphabet announced it will $85bn in capital expenditures in 2025, a $10bn increase on what it estimated at the start of the year. Amazon is looking to spend $100bn over the same period. 'Cloud and AI is the driving force of business transformation across every industry and sector,' said Satya Nadella, chairman and chief executive officer of Microsoft. 'We're innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75bn in revenue, up 34%, driven by growth across all workloads,' Nadella said in a statement. Microsoft reported revenue of $76.4bn, against consensus estimates of $73.81bn, and earnings per share of $3.65, against estimates of $3.37. That corresponds to revenue growth of 18% year-over-year. Revenue in the same period a year earlier came in at $64.73bn. The extraordinary spending on data centers, necessary to power AI products, comes as companies are increasingly outsourcing their computing demands to the cloud. Before the earnings were released, Dan Ives, a financial analyst at Wedbush said Microsoft was on track to $4tn market value 'shortly', and $5tn over the next 18 months as shares moving up to $600 as companies accelerate their adoption of AI technologies. Sign up to TechScape A weekly dive in to how technology is shaping our lives after newsletter promotion 'This was a slam-dunk quarter for MSFT with cloud and AI driving significant business transformation across every sector and industry as the company continues to capitalize on the AI Revolution unfolding front and center,' Ives said in a statement after Microsoft's numbers were released. The extraordinary cost of hiring top AI talent is also coming into focus. OpenAI CEO Sam Altman has said Meta was offering $100m in signing bonuses to recruit talent from his company. Facebook parent Meta also reportedly offered a senior Apple engineer $200m to join its 'superintelligence' team. Microsoft, meanwhile, is reported to be offering high-level engineers a yearly salary of as much as $408,000, not including a one-time stock award of as much as $1.9m, plus an annual stock award of $1,476,000, according to Business Insider.
Reuters
28 minutes ago
- Reuters
Fed leaves rates steady despite Trump pressure, gives no hint of September cut
WASHINGTON, July 30 (Reuters) - The U.S. central bank held interest rates steady on Wednesday and Federal Reserve Chair Jerome Powell's comments after the decision undercut confidence that borrowing costs would begin to fall in September, possibly stoking the ire of President Donald Trump who has demanded immediate and steep rate relief. Powell said the Fed is focused on controlling inflation - not on government borrowing or home mortgage costs that Trump wants lowered - and added that the risk of rising price pressures from the administration's trade and other policies remains too high for the central bank to begin loosening its "modestly restrictive" grip on the economy until more information is collected. While there will be two full months of data before the Fed's September 16-17 meeting, Powell said the central bank was still in the early stages of understanding how Trump's rewrite of import taxes and other policy changes will unfold in terms of inflation, jobs and economic growth. "You have to think of this as still quite early days," Powell said in a press conference after the release of the Fed's latest policy statement, opens new tab. "There's quite a lot of data coming in before the next meeting. Will it be dispositive? ... It is really hard to say." Those comments, and others that placed the burden on upcoming data to convince policymakers that lower rates were warranted, led investors to reduce the probability of a rate cut in September to less than 50%, after entering this week's two-day Fed meeting at nearly 70%. Treasury yields rose while the S&P 500 (.SPX), opens new tab and Dow Jones Industrial Average (.DJI), opens new tab equities indexes closed marginally lower. Powell "made clear that he thinks the Fed has room to hold the fed funds rate steady for a period of time and wait and see how much tariffs affect inflation," said Bill Adams, chief economist at Comerica Bank, projecting that the central bank won't cut rates until its last meeting of the year in December. "If the unemployment rate holds steady and tariffs push up inflation, it will be hard to justify a rate cut in the next few months." The latest policy decision was made by a 9-2 vote, what passes for a split outcome at the consensus-driven central bank, with two Fed governors dissenting for the first time in more than 30 years. Trump has given Powell the pejorative nickname "Too Late" for his refusal to cut rates, but the Fed chief on Wednesday said his hope was to be right on time when the decision is made to lower borrowing costs, neither moving so soon that inflation reemerges, or waiting so long that the job market slides and the unemployment rate rises. Indeed, Powell said the fact that the Fed isn't discussing rate hikes could be seen as a willingness to overlook some of the expected impact of tariffs. "If you move too soon, you wind up not getting inflation all the way fixed ... That's inefficient," Powell told reporters. "If you move too late, you might do unnecessary damage to the labor market ... In the end, there should be no doubt that we will do what we need to do to keep inflation controlled. Ideally, we do it efficiently." The data since the Fed's June 17-18 meeting has given policymakers little reason to shift from the "wait-and-see" approach they have taken on interest rates since Trump's January 20 inauguration raised the possibility that new import tariffs and other policy shifts could put upward pressure on prices. Inflation is about half a percentage point above the Fed's 2% target and has shown signs of increasing as prices of some heavily imported goods begin to rise, a process Powell said is expected to continue. As of June, Fed policymakers at the median expected inflation to rise further and end the year at about 3%. New inflation data for June will be released on Thursday, and a key jobs report for the month of July will follow on Friday, part of the data Powell said policymakers will evaluate as they debate a possible rate cut in September. Earlier on Wednesday, the U.S. government reported that economic growth rebounded more than expected in the second quarter, but declining imports accounted for the bulk of the improvement and domestic demand rose at its slowest pace in 2-1/2 years. Along with Powell's comments, the Fed's new policy statement also gave little hint that rates were likely to fall soon, particularly with an unemployment rate that has stabilized around 4% as weaker hiring trends are offset by slowing growth in the labor force due to Trump's immigration policies. "The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated," the central bank said after voting to keep its benchmark overnight interest rate steady in the 4.25%-4.50% range for the fifth consecutive meeting. The two dissents came from Fed Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller, who has been mentioned as a possible nominee to replace Powell when the Fed chief's term expires next May. Bowman and Waller, both appointed to the board by Trump, "preferred to lower the target range for the federal funds rate by one quarter of a percentage point at this meeting," the Fed's policy statement said. Powell characterized their opposition to the policy decision as part of a debate that was "argued, very thoughtfully ... all around the table," but with a majority of policymakers still reluctant to cut rates without more inflation data in hand. A bipartisan figure who was appointed to the Fed's board by former President Barack Obama and later promoted to the top job by Trump, Powell voted to hold rates steady, as did three other governors and the five Fed regional bank presidents who currently hold a vote on the FOMC. The Fed's regional bank presidents are hired by local boards of directors who oversee the Fed's 12 regional institutions. Governor Adriana Kugler was absent and did not vote. Dissenting members of the FOMC often release statements explaining their vote on the Friday following Fed meetings.
Reuters
28 minutes ago
- Reuters
Qualcomm's premium smartphone chip reliance, Apple modem loss overshadow upbeat forecast
July 30 (Reuters) - Qualcomm's (QCOM.O), opens new tab reliance on high-end smartphone chip sales and the looming loss of Apple (AAPL.O), opens new tab as a modem customer overshadowed the company's optimistic quarterly forecast on Wednesday, driving shares down more than 6%. The San Diego-based company is the world's largest supplier of modem chips that enable smartphones to connect to wireless data networks. Qualcomm reported its chip segment revenue from non-Apple customers has risen more than 15% so far this fiscal year. Its chip segment sales increase, excluding Apple, "is largely driven by ASP (average selling price) uplift from flagship Android launches rather than broad-based volume recovery," said William McGonigle, analyst at Third Bridge. Taiwan's MediaTek ( opens new tab has surpassed Qualcomm this year to become the global leader in smartphone chipset market share, driven by its dominance in affordable and mid-range segments and strong growth in major markets like India, according to Counterpoint Research. Qualcomm reiterated its warning that Apple's shift to its own modem chips in future devices will hit its chip segment revenue. The iPhone 16e, launched earlier this year, was the first Apple smartphone to house a modem developed in-house. Qualcomm forecast September quarter revenue of $10.3 billion to $11.1 billion, compared with analysts' estimates of $10.64 billion, according to LSEG data. The company has not seen signs of customers ordering chips ahead of normal seasonal schedules to try to get ahead of possible tariffs, Chief Financial Officer Akash Palkhiwala told Reuters in an interview. U.S. President Donald Trump's tariff policies have so far provided exemptions for smartphones and semiconductor chips from these levies. But Trump has issued warnings about potential sector-specific tariffs targeting the industry, saying this month that he would "soon announce tariffs on semiconductors." The tariff situation remains highly fluid and complex, with existing Chinese electronics tariffs still in effect despite the exemptions granted for certain categories. Global smartphone shipments climbed 1% in the second quarter, according to research firm IDC, as Apple, a key Qualcomm customer, accelerated shipments to avoid potential tariff impacts. Qualcomm CEO Cristiano Amon said he expects the company's business to supply chips to augmented-reality glasses such as Meta (META.O), opens new tab Ray-Bans to expand. "We have all the designs that matter right now - the number of designs like the Meta glasses is now up to 19, and that continues to accelerate," Amon told Reuters. Qualcomm forecast fiscal fourth-quarter chip segment sales at a midpoint of $9.3 billion, compared with analyst estimates of $9.19 billion, according to Visible Alpha data. The chipmaker reported sales of $10.37 billion for its third quarter ended June 29, beating estimates of $10.35 billion. The company's third-quarter adjusted profit of $2.77 per share topped Wall Street estimates by 6 cents. Qualcomm expects adjusted profit in the fiscal fourth quarter of about $2.85 per share, above estimates of $2.83 per share.
