The U.S. Treasury's proposals to ease disclosure and compliance requirements are unlikely to achieve the objective of increasing listings and could instead increase risks for investors, the CEO of FTSE Russell, the world's largest index firm, told Reuters on Oct. 10.
The Treasury on Oct. 6 published a report proposing reforms to the country's capital markets, as it seeks to ease regulation to promote economic growth. The number of public companies in the U.S have declined nearly 50% over the past 20 years, according to the report.
Speaking with Reuters on the sidelines of a conference in Washington, D.C., Mark Makepeace said low borrowing rates allow companies to access private capital cheaply, and companies may not necessarily feel the need to tap stock markets.
"Money is cheap, private equity firms are awash with cash and the stock market is competing with this. With so much cheap cash, companies don't have to go through the rigors of a public listing but the cheap cash won't be there forever and the trend of companies not listing will right itself," Makepeace told Reuters.
"Removing unnecessary levels of bureaucracy is a good thing but removing the need for good corporate governance practices will only increase risks for investors," Makepeace added. "It's important to make a distinction between the two."
FTSE Russell, owned by London Stock Exchange Group Plc, reportedly has around $15 trillion in AUM tracking its indexes.