Gowling WLG head of natural resources Charles Bond joins Chris Cann, head of research at Mining Journal to talk advantages of listing on the London Stock Exchange (LSE).
Alongside Randy Smallwood, president and CEO of Wheaton Precious Metals Corp, and Tom Attenborough, head of international business development at the London Stock Exchange, Charles discusses the advantages of listing in London, why it's different from listing in other key resources exchanges around the world, and what work there is to do in this area.
Key topics include:
- the legal and compliance strengths and weaknesses for companies seeking to list in London and how this differs across other major exchanges;
- planning listings and listing processes for mining businesses seeking to list in the UK;
- pros and cons for overseas mining groups, including from Australia and Canada;
- the European Securities Markets Authority and their regulations in relation to competent persons reports and what this means pre and post-Brexit for mining companies with material assets coming to London;
- feedback from LSE listed companies and insight into how the exchange assess and evolves its listings;
- London's two-tiered listing system in the LSE main board and AIM market, and advice for companies seeking entry into London via either market;
- Environmental, Social, and Governance (ESG) regulatory frameworks and compliance requirements for companies seeking to list; and
- Much more.
Advantages of overseas companies listing in London: a discussion with Mining Journal
Chris Cann: Hello and welcome. My name's Chris Cann head of mining journal research and you're watching mining journals expert panel focused on the London Stock Exchange. With me I have head of international business development from the London Stock Exchange, Tom Attenborough, head of natural resources at global law firm Gowling WLG and Randy Smallwood, CEO of leading royalties and streaming firm Wheaton Precious Metals. So we should have most of our bases covered with conversation today. Welcome everyone.
Chris: So we're just going to start with the basics if that's good with everyone just on how the London Stock Exchange differs from a listing in Australia or Toronto obviously the two other major minor jurisdictions from a listing perspective and maybe if I could start with Tom just to get the official view from the Exchange and then perhaps move onto Charles and Randy to get a different perspective.
Tom Attenborough: Sure. Thanks Chris. London has a very long pedigree in the metals and mining sector. In fact our longest continuously listed security on the London market is Antofagasta the Chilean miner. We have 170 mining companies or so on market valued at round about half a trillion dollars. So it's about 20% of the global market cap of the mining sector and so that's I think one of the key differentiators that anyone listing in London is joining an echo system where investors have a deep understanding of the sector, you have a research and analyst community who understand it, cover it in depth and do that in absolutely critical investor education piece and you've got a peer group on the London market right across from the very large to the very small of the 170 odd companies. A 100 have a market cap of sub $100 million so it does cater from the junior all the way through to some of the biggest mining companies in the world. I think it's a very complimentary listing in many respects to companies that have recently come down the path of adding a London listing to a pre-existing ASX or tiers existing and there are great reasons to add one. It's a very complimentary investor based that trades here and you can build up a pool of liquidity in this time zone. It effectively allows you to extend your time zone almost double to really tap into that big global investor base. It's become a very well travelling route out of London this thing. It's been a busy year for us this year in what's still not the easiest time for the broader metals and mining sector. We've seen seven companies join the market, three of which have raised capital, four of whom who've done it just by way of introduction and again the rules allow for a variety of different structures be it an IPO or an introduction assuming of course you've got the historic free float. So we think there's a great market here. It's additive to companies' pre-existing listings and we can really support ongoing liquidity in this market to actually allow companies to execute in many cases some larger portions of capital for development that perhaps they do not feel they can necessarily reach in just their own domestic market or their sort of pre-existing listings.
Chris Cann: OK. Charles perhaps from a legal or compliance perspective where do you see the strengths and weaknesses if you're looking across those key exchanges.
Charles Bond: Well I definitely agree with Tom that these are different markets for different types of companies so historically Australia and Canada have been markets for the smaller companies to start with. They are the breeding grounds of emerging natural resource companies where people can start these companies quite quickly, get them up to speed and often they will stay on that market because their assets are in that jurisdiction. There may be Canadian assets, there may be Australian assets but as those companies grow and they become more international, particularly if those assets tend to be for example in an African jurisdiction then they gravitate more towards a London investor based. I think historically we've South American assets gravitate towards Toronto although as Tom said people like Antofagasta as they get to the larger end will come to London to top up their capital base but I think London as Tom says is very complimentary around that so you can double up with your investor base by coming to London and tapping that much larger group with investors. From a regulatory perspective that the markets all have their different regulations. In principle they are not that different ultimately. Some have more onerous obligations than others but what one gives the other makes up if you see what I mean so I don't think there's a huge difference and we can probably come onto the regulatory piece a little bit later.
Chris: Sure. Randy obviously Wheaton looking at a London listing, most people would associate the large royalty in steaming firms with North American listings. Obviously you have dual listings in New York and in Toronto. What's driven you over this side of the pond and how do you see it as offering something different to what you have?
Randy: Well Chris good point. We started our company 16 years ago in Toronto on the TSX and shortly thereafter a couple years after that initial listing, listed on the New York Stock Exchange and in fact about 70% of our stock now trades in the New York Stock Exchange so one would argue that New York has actually become more important than the TSX. The natural next step. There's no denying that London is a world class financial centre of the categories of cities like New York and others and so the natural next step for us in our goal to become a global solution, a global streaming company is London and we've already got about 15% of our shareholders are based in the UK and in continental Europe so, but definitely a real focus within the UK within London and so it just made sense for us to move into that space. It opens up. We kept on running into, I probably spend more time in London than I do in Toronto already and we kept on wetting an appetite there for funds that are focused on the LSE and looking for pressure metals investments. Our model is unique and so having nothing of that scale and size with our business model we just felt it was an excellent opportunity. I can tell you the response we've had since announcing the intent to list has been incredibly positive and lots of interest and so we're really excited about this process but still working our way through and hopefully listing sometime within the next month.
Chris: OK. Terrific. Public equity markets across the world I think since the good old days if I'm allowed to call them that, back pre-financial crisis. They haven't been as productive as they once were and I think Australia's been a little bit of an anomaly where there's been a bit more luck raising capital over there but I would be interested to get your view on if you see that change in the mining companies. Probably may be starting with Charles in terms of what you're seeing from client base and if you're seeing people having more luck in the future as commodity prices come back into an upswing or if we're looking at something of a structural change in terms of how miners raise money.
Charles: Yes, it's an interesting question. I think from our point of view you're right, Australia probably is a bit of anomaly at the moment. It's running very hot with some of the gold stocks and Australia are doing particularly well at the moment but that is a little bit of a bubble around Australia and we haven't seen some of those types of valuations over here in London but I think the death of the capital markets is a story I've heard a couple of time but I don't particularly believe in. Private equity came into this game a number of years and had been very successful but those guys are long investors, they take their time to do things. To get the money they'd spend a lot of time on due diligence and they demand a lot from their companies and rightly so but when money is out there and to be invested and the commodities are running actually capital markets are probably the quickest way to do that and if you want an example of that all you have to do is look over the Atlantic at the moment at what's happening in the States not just in the mining sector but in the tech sector with the special purpose acquisition companies or SPACs as they're known where people just can't get enough of those and people are rushing to market with SPACs in the States at the moment so actually capital markets as a concept is still very much alive and well and I think as far as I'm seeing for the miners it is still a very active market and I think you're going to see in a sector which is I think increasingly becoming more active especially around gold factory minerals etc. I think you are going to see more activity.
Chris: OK, Randy obviously you've seen value in public listings or taking on another one. Where's the draw for you at the moment and why do you see it as a portal to as Charles is saying, faster access to cash?
Randy: Well we're fortunate in a sense that our company Wheaton Precious Metals right now has a market capitalisation of well of $20 billion and we have got incredibly strong cash flows and my biggest challenge is actually spending it as fast as it's coming in so we're not in the capital raising mode. In fact I'm not sure we'll ever have to issue shares again to raise capital. We're sort of in that kind of a situation right now. In fact to highlight the difference our business is supplying capital to the mining industry and so from that perspective having a listing on the LSE will definitely raise our profile with respect to an alternative. Streams should never be the only source of capital, they should work with equity and list debt in terms of funding projects on a go for basis but really the LSE listing I think one of the biggest benefits we'll have out of that will be raising our profile with respect to being a funding option as we go forward and highlighting the strength and the capacity to supply capital to a lot of these projects and work as partners with new operating partners as the developer. We are seeing a bit of a push definitely in the precious metal space around the world in terms of sending the investment back into the ground. There hasn't been a lot of exploration for a very long time now so we haven't seen much of it in the base metal space yet but I'm sure that time is coming and when that happens we're there to help with the cost.
Chris: Randy you mentioned there streams shouldn't be the only form of capital that you're building into a capital structure. Obviously you want some debt potentially in there, you want some equity in there as well. What do you see when you're working with smaller junior partners who haven't got the cash flows, anything like the cash flows, usually no cash flows and they're trying to raise equity and they're trying to get access to debt. In terms of public markets, how much of a challenge is that for them and how much support do they need from groups like yourselves or from the exchanges themselves to be successful in getting a raise in a way.
Randy: Well one of the things that we deliver is a stamp of approval. We have got a long reputation as being very, very diligent in terms of the quality of the projects that we invest into. We really focus on healthy operating margins and such and so I think probably one of the biggest benefits that we've had is delivering a stamp of approval to a broader market place which provides comfort to that broader investor base on a go for basis. If Wheaton's in there and we've had the ability to go through and basically tear the entire geological model and line plan apart and put it back together again and we have faith in the ability to produce profitable metals out of these mines, that's a great check mark in terms of stepping off, providing comfort to investors on a go for basis and so we have worked in sync with other partners in terms of providing a broader package and continue to sort of expand into that space. A good project will always find a way to move its way forward and get that capital and so I really do think it comes down to the fact that once we dive through this project, any opportunity that like and if we're comfortable, willing enough to put our name on it that helps the cause.
Chris: OK Tom. Looking from the actual exchange perspective and the business that's coming to you guys and what they're asking for from the exchange, are you seeing that changing at all or are you seeing business going to pick up for you and for mining companies and getting a little bit easier than may be it was a few years back for getting a raise in a way?
Tom: Yes I think the listing business itself Chris is one that has continued to be quite active despite the fact that it's not the easiest time in many of the sort of subsectors within mining to actually raise capital. So as I've mentioned we've had seven companies join our market this year. Between them they've only raised $100 million at the point of listing themselves but I think that goes back to the points been made already that actually have a variety of different reasons for wanting to list. Part of it is about having that access long term to capital and wanting to raise further equity. It's partly around profile. It's partly around liquidity for your existing shareholders. It's partly about expanding your reach, your profile more broadly, so I think there've been a bunch of different motivations that have brought companies to our market this year. I think those that have tried to raise capital in certain sectors in the gold sector for example which has run hot this year have succeeded well so we saw AX gold, a relatively small junior gold business raise $54 million are now a market capital of just over $100 million and that's a rare opportunity for investors to play the gold market in Greenland. It's a rather unique story and that went down very well. Quite a number of others have chosen at this stage to list by introduction and bide their time, build up an investor base that cares about you, work with brokers to go out, tell your story and then at the point perhaps not quite what Randy's plans are but for many of the others it's about building that story over a period of months and years, build up that confidence and trust with investors and at the point at which you then want to raise capital you're in a much better position to do so with a group of investors that know your story better. I think there's nothing to stop companies, in fact I think it's quite a good strategy to list first, bide your time, build up that network and then raise capital a little bit later on because it think if you look at the different factors you have to weigh up as a leader of a business you have to think about the company's story, the macro backdrop, the net for capital, the process itself and the months it's going to take to get your prospectus done. It's quite difficult to get all of those things coming together all at the same time so actually if can take the listing piece out of it, get that done and give yourself the platform you can then raise non pre‑emptive equity going forward much more easily, again once you've built up that investor base. I think resolute mining was a great example of that in the gold sector. They listed in London in June 2019 just by way of introduction, they already had a free float on the ASX. About six months later they had an acquisition. They put a bridge loan in place and immediately took that out with a primary equity raise of just over $100 million about a third of which was placed with London investors who may have been new to the story and that liquidity event was a first real opportunity for them to invest in size so that's worked well and so I think thinking sort of holistically about what I want from the public equity market and how am I get there over years doesn't necessarily mean you have to do everything all at once at the same at the point you list.
Chris: Charles I can see you nodding up there in your little box. From our perspective in the media we tend to see headlines a lot, we write a lot of headlines, we see a big listing when Wheaton comes to market it's going to be a big splash, it's going to make a big deal but what Tom's saying about a successful raising or a successful listing being a process that goes for months and months. Does that resonate with what you're seeing when you're working with clients who do well?
Charles: Yes I think that if you want to do a listing in London you do have to plan it and some people plan it a year, two years ahead of the actual event. The actual implementation of it may only take say three months from when all the advisers pick up their pens and start running around London. That's relatively quick I think to get your company into the right frame of mind, to do the listing in the first place you've got to start thinking quite a way out. The process itself if relatively formal now in London but I think as Tom said as you know you can make it even quicker if you're not going to raise cash, you don't have to go through the marketing, the roadshow etc., you can do it even quicker.
Chris: OK. Charles I'll stay with you. We touched on regulation earlier but it is a big deal for mining companies, particularly smaller mines or development groups that potentially need the capital because of the nature of the industry but haven't got big teams. How does the regulatory compliance differ across the major exchanges and how would you encapsulate it with experience for those listing on the London Stock Exchange?
Charles: That's quite a different question because there are so many different variables and different markets within each jurisdiction. In London we have different tiers as you know and it's the same in Canada with the TSX and the TSX each has their junior market and you can move up to the main market where certainly in the UK with a premium listing it is a very onerous obligation. I think often you see companies saying we've decided to do lists because the costs of regulation outweigh the benefits of being listed. I sometimes take with a pinch of salt actually. I suspect often there are underlying reasons other than regulation. Every jurisdiction has its rules to follow and normally if you're doing well you can follow. London does have obviously its listing rules, its prospectus rules, its market of use, its insider dealing, all those are replicated in other jurisdiction in one way or another so you're always going to face the same types of principles. There are some issues for Australian or Canadian companies when they come to London. For example, those companies often under their jurisdictions of incorporation for example, don't often have pre-emptive rights embedded in their constitution whereas UK investors would expect companies listed here to have pre-emptive rights so you might need to change a constitution for pre-emption for example and one area which I think is an area of interest and change and Randy may be looking at this at the moment is the fact in London we have to abide by the European Securities Markets Authority and their regulations in relation to competent persons reports when a mining company with material assets come to London. There is an exemption for that if you are in an equivalent third country and you report on a regular basis as a mineral company. Now unfortunately the European regulators have never seen fit to say who are those equivalent third countries so Australians and Canadians have always had to produce a CPR. As and when we leave Europe those regulations will likely drop away so there is an opportunity there for I think it will be FCN and the Treasury to decide whether or not we still have to go through the formula of having a CPR for Australian and Canadian companies having to produce those because obviously if they don't and we know that their standards particularly in Canada are probably higher standards than the European regulations that will they make life a lot easier for those companies to come to market here and there are similar issues for royalty companies for example because they have to produce a CPR for each material asset and if you can imagine the number of assets that some of the big royalty companies are invested in and their ability to report on assets which they may only have a minority interest in. That creates complications so if we could deal with some of that regulation that would be helpful for London listing but generally I think otherwise our regulations are not so much different from. I speak to my Canadian colleagues and some of our Australian friends and everyone moans now and again about their regulation authorities becoming more and more difficult but that's what happens with regulation unfortunately over the years issues are spotted, that regulations are made and they get layers over layers over layers and that is just the way it goes I'm afraid.
Chris: OK. Charles is talking about specific things that you might be looking at. Obviously you are in a great position where you're a large company, you've got a big team to deal with all the regulation but when people report to you about what kind of environment you're walking into from a regulatory perspective how does it compare with what you've experienced in North America and are there areas where you think things can be improved or as Charles says is it just a matter of one of life's necessary evils. I probably shouldn't call it an evil but [unclear].
Randy: We're most of the way through updating our governance policies and procedures here in the company to satisfy another regulatory framework. We already have to balance between Canadian Securities Regulators and the FCC down in the United States and so there's slight variances there is terms of policies and procedures. I agree with Charles' comment on the QPE as we call qualified person or a CPR confident person's reports. There's definitely some differences there between what we've seen in North America historically and the other area that I think I've seen probably the biggest differences insider trading and windows in terms of when insiders can trade seems to be a little bit more rigorous framework around that within the LSE. From our perspective we're going to come up with a set of governance policies and procedures that matches all three and I think in the end it actually makes us a stronger company. There is going to be some effort to go through this whole process but I have no doubt that there's strength in every set of that kind of a framework and so blending the three of them it actually makes us a bit of a stronger company from that perspective and so it's part of the cost of growing in my eyes and as I said in the end we're going end up with one set of policies and procedures that satisfies all three regulatory systems and it hasn't stopped us from moving forward here by any means so that being said we're still not listed so...
Chris: Tom, what kind of feedback are you hearing from the companies that are already listed on the London Stock Exchange and is it pressure on the London Stock Exchange to constantly assess, re-assess and have its regulations evolve for its listings?
Tom: I think we've heard a bit all of what we've just heard over recent months I think on the one hand the flow of businesses out of the TSX and ASX would indicate that actually people tend to find it a relatively smooth transition given as Charles said given aside from one or two areas that the sort of relatively harmonised nature of those sort of rule books and the types of things that you need to abide by on those markets are not so hugely different. I guess the only significant difference becomes if a company's looking for a premium listing in the London markets and as part of that trying to get into the FTSE UK index series and become addressable by the passive demand that exists around the world and focused on the London market and that where we have the regime called the super equivalent regime which is a whole layer of incremental governance requirements which would look a little different from those that have been experienced in other markets so I think that's one area, one bit of feedback that we hear. I think Charles is absolutely right that the aspect around CPRs is something that in a post Brexit world I think will be one of a number of things that our regulators decide to look at in terms of how can they make London the most competitive market they can in a post Brexit environment. So without sort of prejudging the FCA might come out over the course of the next year I think that's exactly the sort of area they'd be looking at addressing to make sure there is the least possible sort of grit in the system to make that easy. I think from our stand point at the LSE we try and control really what we can control. Of course we feed in like any other market participant to the various consultations with the regulator but we are consistently trying to do what we can to improve our markets to make them more attractive in other ways and a lot of that is around access to investors whether that's building linkages with China that we've done in the last sort of year and opened up, whether that's really trying to develop our access to retail investors in primary offerings which again is something that's really taken off this year and have individual investors participate to a much greater extent in foreign offerings. So these are the kind of things actually that I'm spending much more of my time focusing on to make sure the next generation of companies that come through find it as easy as they can to raise capital.
Chris: OK, you talked about a post Brexit world and the fact that there could be some significant changes that Charles' client and Randy himself in his company are likely to benefit from. Are you expecting or are you preparing for a re-assessment of what the London Stock Exchange does in terms of its internal regulations to keep up with whatever changes are made or are you not expecting to have to make any major adjustments?
Tom: I think it's an interesting question. I think we continue to monitor all those developments. We operate, the AIM market, our junior market on which we have full control on the rule book I think to the extent that FCA decides to makes changes to the broader listing rule framework for the main market. That's something we continue to look at. As we continue to in any environment not just in a post Brexit world but to make sure that all our markets are fit for purpose and keep up with investor expectations and issue a reality. So there's often small changes around the edges going through in rule books and we continue to what we can to make sure that they're as up to date and functioning as well as possible across all the markets.
Chris: OK. Tom stay with you the issue of regulation is think that's largely what's driving a two-tiered system that you see in the London Stock Exchange with the AIM and the main board which you've just alluded to similar system that you see in Toronto. Australia hasn't got it. Interested to hear from Charles in particular about how he feels about the benefits of that two-tiered system but from your perspective and seeing how it's meant to work with smaller companies not as heavily burning with regulation and largely companies accessing larger investors or a deeper pool of investors and having to cope with a bit more. Do you think it's working? Is it something that you're absolutely going to continue with and you're getting good feedback on or is there some room from improvement there?
Tom: I think it's by and large working. The reason we have multiple market segments is really to help companies of all sort of shapes, sizes and stages of development. I think that many people ask us what size do we become too big for AIM or what size or we too small for the main market and I think what I'd say to that is that it really depends much more around what you want to use the market for than actually I think your issue size and market cap so we've had some large companies list on AIM because actually they see significant capital raising requirements over years to come. They know they're going to be regular visitors to the market or they're trying to in act a sort of roll up strategy and do regular MNA where some of the flexibility around the AIM rules and being able to raise non-pre-emptive capital and use equity as paper in a more easy and straightforward manner has real value. We see those kind of companies come into AIM even at larger size. We've seen some quite small mining companies, $20 million/$30 million list just on the standard segment of the main market because they've come and said well I've done my raise now for this project. I'm not going to need to come back to the market for a while, we're very happy with the incremental sort of prestige of the main market if you like and we're happy to put up with the additional governance requirements if we do need to raise capital further down the line it'll likely be for a new project that'll need new disclosure anyway and I'm very happy to put a prospectus out at that time so I think it's, I think the way I look at it is that they are different markets, they're different constructs, different regulatory responsibilities in those markets but by and large they're trying to help companies who are looking to do sort of different things rather it being purely about size. One's about growth and scaling and regular access to markets and having the value of those flexibilities and the other being typically for larger companies but not solely but the companies that are well-funded don't need to come to market regularly and like that additional sort of say prestige and visibility.
Chris: Yes, Charles part of your job presumably is to advise your clients on which market if they want a London listing they should be listing on. What does that discussion look like? Is that an accurate reflection, Tom's summation of what each market. Is there a prestige element versus an administrative burden element?
Charles: Yes I think much of what Tom's says is what we repeat to our clients about where their entry point into London is going to look like. There's no doubt that AIM has been one of the most successful or probably the most successful small market in the world historically. You just have to look at the eco system that's being built around it in London. If you go to an AIM dinner here there are thousands of advisers built round that system so it's been tremendously successful. I think over the past few years as regulation has timed up which it has had to do in some instances then some companies have looked at the standard listing for reasons Tom said. They've also looked at from a regulatory perspective. It's sometimes bizarrely kind of less onerous to be a standard listed company than an AIM quoted company and in fact some of the new regulations around raising further capital for a standard listing have now been eased a little bit. There's now a new simplified prospectus regime. There's a new EU recovery prospectus you can put out if you want to raise cash quickly which is a simplified disclosure document so there are some benefits on being on the standard list as well but I think both markets have different things to offer. We sometimes, investors, if you're looking at an investment in a standard listed company then they may look to see who for example the financial adviser is on that because you don't necessarily need a sponsor behind you to go on a standard list whereas you would need for a premium listed sponsor or a nomad on the AIM market and so I think if you're just coming to the standard and it's may be just the lawyers or the company itself it putting up. There's may an eyebrows raised as to the governance around that company so we do always try and persuade people coming to the standard list to make sure they've got a financial adviser engaged as well but both markets are very viable and I think there's a very good choice between them at the moment.
Chris: OK. Obviously the nomad system is a key point of differentiation for AIM. How does it compare to the system they use in Toronto?
Charles: Not sure I know the answer here...
Randy: Can I interject here?
Charles: Yes, please go ahead Randy.
Randy: Yes most of my experience has been here in Canada between the TSX and the TSX venture and the AIM has got the same position as the venture does here in Canada and really what it comes down to is if you're developing in the resource sector, if you're exploring or developing a project you're not generating cash flow, you're not a cash flow generating company and so in terms of regulatory framework has a cost. Regulatory compliance has a cost and so simplified systems obviously are cheaper and when it comes to attracting investors I think what investors really want is to know that their dollar is going into the ground, is going into a project. It's not going to satisfy a bunch of regulatory compliance requirements and stuff like that but it's going into the ground and so any time we can sort of highlight efficiencies and simplify processes, policies and procedures to make sure that more of those dollars go back into the ground, it's going to appeal to investors that much more and so the resource sector's a very high risk especially in the development, the exploration and the development side. It's a very, very high risk business that requires significant capital into the ground long before you're going to need cash flows these projects long before. It's a very unique industry from that perspective and so what it needs is it needs as much capacity as it can to advance these projects to get to that stage I think that the perspective that the venture exchange brings here in Canada is that simplified people understand that there's a higher level of risk associated with a venture exchange investment. I'm talking about the shareholders, the investors. They just understand that when they're moving into it's quite clear and well understood but at least they also know that the bulk of the dollars being raised are going into the ground as opposed to keeping listing status current and stuff like that so it's a really important thing that you have to remember from the resource side and that's why it's had such great success here in Canada and in itself in London when it was brought in I would say it just a huge a success if not even bigger.
Chris: Tom, that's really interesting to hear that from Randy are the view of investors that they would like to see simplified. I guess it often means less regulation. I would have thought that a lot of investors because of how risky mining is would be confident if they saw more regulation. How do you go about balancing that Tom when you're piecing that together, you've got two different exchanges, two different tiers and they both have a separate approach to regulation, how's that balancing out work internally at the London Stock Exchange?
Tom: I think it's one of those questions where if you ask two investors you get three different views. I think often you also get different answers depending on who you're talking to within the investor group. It depends whether you're talking to the portfolio manager who is supplying the capital where I absolutely agree with Randy's comment. He wants to know that as much of that is going to the project as possible or it depends if you're talking to the compliance officers who are looking to screen around sort of company compliance who are looking to ultimately influence where that investment house is going to be voting its block of shares where again they might take sort of two different views I think. Our business as an exchange is always an exchange by definition is that meeting place between sort of buyer and seller and to try and make sure that we are as balanced as we possibly can across those different sort of constituencies but inevitably for every sort of rule that's there you'll have someone perhaps on the buyer's side managing the money who thinks it's a bit too onerous and someone actually sitting in the back office who thinks it could be tightened a little bit. That's the sort of nature of regulation but we think we've got just about a sort of happy medium at the moment.
Chris: Fair enough and we are starting run down on time but we can escape without talking about ESG. Feels like it's obviously it's taken over the mining world. It's taken over the world recently particularly accelerating it feels like over the past 18 months. Quite interested in may be starting with Charles to look at what London listings are having to do to make sure they're meeting stakeholder expectations at the moment.
Charles: Yes I think the first thing to say is I think probably I don't think mining's catching. I think it was always ahead on this and the rest of the world is possibly catching up. Corporate and social responsibility was always a part of mining. May be it wasn't at the forefront of every presentation you saw but it's always been there especially in emerging markets for example so I think the miners are very well used to this and now just ESG is the new name for what they had historically been doing and let's face it ESG is a good method of finding out whether a company is competently managed and is managing its risks effectively and I think it's a very good thing to be at the top or near the top of the agenda. I think London is reacting a little bit from the regulation but not overly and Tom will probably comment from the investor side but the listing rules for example there is consultation over some new changes to the annual accounts to include more description of a company's annual compliance with the ESG requirements and the taskforce and their requirements so there is some change on that there's potentially some change coming into the disclosure requirements in documents as well but I think the major change is around the principles of ESG and the investor sentiment towards it.
Chris: OK. Charles has discussed changes in regulation may or may not be coming in. Tom, can you talk us through what the London Stock Exchange is doing around ESG and how you are working that into various frameworks and compliance requirements?
Tom: Well look I think I completely echo what Charles said. I think the rise of focus in ESG has been huge. The volume of capital that is specifically now tied up in mandates which are very strictly governed by ESG criteria is the fastest growing source of capital anywhere globally and so I think the pressure from investors to have greater data on which to make those asset allocation decisions is driving a lot of this change. Now some of that is going to end up as Charles said in all likelihood working its way through consultation via the regulator into the listing rules for the London Stock Exchange some which is going to be from other external providers so I think you're going to see that the task force for climate related financial disclosure continue to put pressure on the way in which auditors do their work not just on London but anywhere around the world. I think you're also going to see issues like the transition pathway initiative and the measures that that puts on company management's readiness and preparedness to deal with the sort of transition to a local carbon economy is something that we're seeing sort or more and more off so I think our role as an exchange is not just to be making the rules because I think there are plenty of other stakeholders trying to put additional things in place but actually if you would navigate those in a sensible way and so one of the things that we did a couple of years ago is put out our own ESG disclosure guide which really tried to say look they're a bunch of different commentators round the world now talking about ESG. What do we really think matters and what do investors tell us really matters in the way you disclose so in the light of the new things that Charles was mentioning and that others are going that's a document that's going to be refreshed and published sort of early in 2021 so we made sure that we always give our issuers hopefully a way of sort of guiding them through the many different sort of agencies that have a view on this and making sure they're doing ultimately the right thing and understand what investors want.
Chris: OK when you say you're refreshing that document and that guidance is that likely to look like a more contemporary view of the issues that you're looking at or is the trend that it's going to be a stricter and stricter set of guidelines as requirements and standard are increasingly heightened?
Tom: No very much the former. It's taking what investors are feeding in through to us and what we know other agencies are trying to drive to and it is actually a set of guidelines so it's not, this is not if you don't follow these guidelines we'll throw you off the London market, there are other mechanisms for doing that. If you break the listing rules, if you don't meet your other disclosure obligations there are mechanisms for that. This is actually a much more practical, this is what investors are telling us they would like to see you do. This is where we think you're going get rewarded because not only are investors going to have the right information but index providers are going to have the right information on which to score you correctly which will then bring in other funds from elsewhere. I think it's very much designed to be practical, what does best practice look like and the fact that we're updating it two years after we published the first one. I think it just shows what a moving landscape this is.
Chris: OK Randy how does it look from a perspective dealing with the Americas essentially but obviously being based in North America versus what's happening over here. Are the conversations and disclosure requirements feel like they're fairly alive at a global trend or can you see the differences in step offering various jurisdictions?
Randy: First Chris I just want to echo what Charles said. Social licence has been a longstanding requirement in the resource sector and really I think the biggest change that's happened in the resource industry for at least for a responsible successful company is the disclosure, is getting the information out there so that people can actually understand that and the resource sector has a very unique attribute in the sense that it can dramatically improve the standard of living and sustainability in rural areas in remote locations and like no other industry can. Our minds, we don't have a choice where these mines get built. Their geology sort of locks them in place and so it is a unique attribute of this industry in terms of being able to deliver that on a go for basis so I stand behind the track record of mining and the resource sector. Obviously we've got a few bad apples in the crowd but overall the industry has done a very good job for a very long time in terms of managing this whole area. Europe has always been more focused on this than North America. I would say they're definitely ahead of the curve on this and it is one of the reasons that we as a streaming company we don't operate mines and so we don't have direct influence but we initiated about eight years ago, probably ten years ago now is we started co-funding programmes with our partners. We're leaders in the space with respect to the streaming/royalty companies where we actually expand the capacity of our operating partners to deliver long term sustainable benefits to these communities and to our neighbours around these mines where we all get our metal from and it's the responsible thing to do. We're getting a resource from the ground in this area. We have to make sure we leave some type of benefit beyond the jobs, beyond the mine itself, some long term sustainable benefit in these areas and so with kind of a track record and definite leaders in the royalty/streaming space it was one of the attractions of listing on the LSE is that we know that it's got a higher focus level amongst the funds and the investment pools in Europe and we felt that our track record would stand alone and so it was one of the key attributes that motivated us in terms of seeking an LSE listing is that the importance, we think the LSE is ahead of the curve on this, Europe is ahead of the curve on this but the rest of the world is catching up fast and it's going to become more and more important. I think systems are definitely a lot better than they have been in terms of disclosure and being able to measure that and report how well we all do in terms of maintaining social licence within the communities that we all operate so it definitely fed into our LSE choice.
Chris: Thanks Randy. Guys it is unfortunately all we have time for. Randy, Tom, Charles thanks very much for joining us.
Tom Attenborough: Thank you.
Charles: Thank you.
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