Chancellor to detail £50 billion urban adjustments, aiming to boost Small and Medium-Sized Enterprises (SMEs) significantly

In a significant move aimed at bolstering the UK's capital markets, Chancellor Jeremy Hunt is set to announce a series of "Mansion House reforms" during his annual speaking slot in the City of London.

The reforms, which are expected to be unveiled soon, aim to create a more favourable environment for start-ups, address a slump in the number of firms listing their shares on the London Stock Exchange, and channel tens of billions of pounds of Britain's pensions savings into high-growth companies.

One of the key aspects of the reforms is the loosening of research restrictions. As the EU plans to loosen its own research restrictions, there is a risk that the UK could become an outlier if it maintains the current regime. However, Hunt's reforms aim to simplify rules for buying and selling shares, boost stockbroker research on listed companies, and deliver higher returns for investors.

The reforms also include the simplification of prospectus documents that listed companies have to publish when raising money from investors. This is expected to make the process less burdensome for companies, potentially encouraging more firms to list on the London Stock Exchange.

In a bid to support high-growth companies, the pension providers joining the "Mansion House Reforms" package aim to allocate over 5 percent of their investments to private equity and startups. Major UK pension funds such as the Universities Superannuation Scheme (USS), the Environment Agency Pension Fund, and the BT Pension Scheme are among those participating. The City of London Corporation hopes for a 5% allocation of defined contribution scheme investments to private equity, with the majority being UK asset classes.

Khalid Talukder, co-founder of DKK Partners, sees these reforms as entrepreneurial thinking that is long overdue, especially for fast-growing companies in need of extra support. Investment expert Josh Boer, director at tech consultancy VeUP, views these reforms as a step in the right direction for unlocking investment and turbocharging the economy.

Hunt's reforms also include plans to make share certificates in public companies fully digital. This is intended to make it simpler and cheaper for companies to manage their share registers. Additionally, Hunt is expected to announce his support for a new trading venue that will allow private companies to have their shares traded on a handful of days each year without floating on a stock exchange.

The Chancellor will also announce consultations on an "evolutionary" reform of pensions markets, including efforts to merge smaller, inefficient funds. Hunt may also consider more ambitious proposals to create "superfunds" similar to the giant pension funds in Canada and Australia.

However, Hunt has taken a cautious approach, stating that he will not mandate where pension funds invest their money. This is to avoid a repeat of the Big Bang II, a period of deregulation in the 1980s that led to significant volatility in the financial markets.

These reforms come at a time when companies are remaining private for longer and increasingly looking overseas when they do list their shares, such as Cambridge-based chip giant Arm listing in New York. The "Mansion House reforms" aim to address this trend and make UK capital markets more attractive, seizing the benefits of Brexit and fostering a better funding environment for start-ups and growing companies.