Is the appeal of the FTSE diminishing? Over the last two decades, we have seen a decline in activity, returns, and listings, prompting discussions in boardrooms nationwide about whether companies are straying towards alternative markets or leaving public markets entirely.

While London continues to hold its ground as a leading global financial hub in areas like foreign exchange, derivatives, debt, and private equity, maintaining a vibrant stock exchange is crucial for nurturing other financial sectors. Historical examples, such as Edinburgh and Manchester, which closed their stock exchanges in 1973, illustrate the repercussions of a faltering stock market.

Several factors contribute to London’s relative decline: the absence of large technology firms, a shift of pension funds from equities to bonds, a cautious investment climate among UK investors, diminishing new listings, the aftermath of Brexit, and the exodus of companies towards private equity or foreign venues like New York.

Regulation has played a role in many of these circumstances, with mixed effectiveness. While strong and efficient regulation is essential to protect investors and maintain market integrity, it must also be sensible and balanced. Unfortunately, in the last two decades, this balance has often been missed.

For instance, regulatory requirements compelled London-listed companies to allocate £250 billion to address pension scheme deficits. Yet, just years later, those same schemes reportedly held a combined surplus of £475 billion—far exceeding national healthcare costs or multiple times the public spending deficit for 2024. This brings into question the regulators’ past decisions.

Could outcomes have differed? The input of listed companies—those directly affected by stock market regulations—has been largely overlooked in regulatory development over the past twenty years. Traditionally, regulators have relied heavily on organized lobbies from investors and governance experts, while the insights from listed firms have been minimal. They might have taken Warren Buffett’s advice to heart: never consult a barber about needing a haircut.

The CBI, which includes many listed firms, has initiated a group aimed at amplifying the voices of the regulated. This group consists of over 20 companies, many of which are in the FTSE 100 and represented by top officials. Their mission is to conduct research and propose policies that ensure listed companies’ perspectives are effectively communicated. The focus will be on enhancing market liquidity, easing reporting burdens, and addressing the growth of “tracker” funds and their impact on company-investor relationships.

Additionally, the group aims to cultivate a relationship built on trust and practicality between boards and investors, prioritizing the interests of the companies rather than succumbing to distrust and rigid adherence to regulations. In essence, they will advocate for circumstances where compliance might not always align with the best interests of the company.

Rupert Soames leads as chairman of the CBI.