UK Set to Abolish Paper Shares After 400 Years to Boost City’s Appeal

The UK is poised to discontinue paper stock certificates as Chancellor of the Exchequer Rachel Reeves seeks to completely digitize Britain’s capital markets, improving the competitiveness of the City.

The initiative to phase out paper shares, a move endorsed by various FTSE 100 companies due to the substantial administrative costs tied to issuing physical certificates and maintaining separate paper-based share registers, is anticipated to be announced by Reeves during her Mansion House address on Tuesday, according to sources who asked to remain anonymous.

Eliminating paper shares, which are still held by tens of thousands of retail investors in the UK’s largest listed companies, was a central recommendation from a government-commissioned report on digitizing UK capital markets, led by Douglas Flint, Chairman of Aberdeen Group Plc, in 2023. Over 400 years after the introduction of joint-stock companies in Britain, it remains one of the few significant global markets still using physical certificates.

Reeves intends to present this initiative as a modernization and efficiency enhancement for UK finance, aligning with her efforts to stimulate investment and growth in Britain.

Under Reeves’ proposal, paper-based share registers will evolve into digital registers, with the long-term aim of consolidating all shares into a single system, according to one of the sources.

This shares initiative is taking place against the backdrop of London’s dwindling stock market. Several leading British companies have chosen New York for their initial public offerings, while numerous already-listed firms are relocating their stock listings to other exchanges.

In an effort to counter this trend, Reeves has been implementing strategies such as encouraging pension funds to invest more in British equities and urging regulators to adopt a growth-oriented mindset. In her upcoming Mansion House speech, she is also expected to propose lowering the £20,000 cash cap on tax-free individual savings accounts to promote greater investments in equities.

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