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Stability not more changes needed for equity markets

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The announcement by the Business Secretary, Vince Cable, that the Government is to conduct a review of the way that the UK’s equity markets work has been greeted with a degree of scepticism by a leading business group.

The Institute of Directors (IoD) said that what is needed is a period of equilibrium rather than further change.

The Government review is to look at several areas where it is thought improvements can be made in the way that investments are made in companies.

These include ensuring that the timescales over which investment risks and rewards are considered best match the interests of companies; strengthening the engagement between institutional investors and companies; boosting transparency; assessing the legal duties and responsibilities of asset ownership; and judging the impact of increasingly fragmented share ownership.

Miles Templeman, the IoD’s director general, said: “The latest review addresses a number of important issues relating to the governance activities of institutional investors. There is no doubt that many investors could do more to engage with their companies under ownership.

“However, these are issues which have already been considered in a number of Government reviews of corporate governance over the last couple of years, including the recent BIS consultation on short-termism.

“It is not clear what a further review of these issues will uncover. What is needed right now is a period of stability in corporate policy making, not further uncertainty”.