So the City is in a tizzy. SpaceX, Elon Musk’s interplanetary circus, has decided to list on the London Stock Exchange, and the regulators are wringing their hands like Victorian spinsters discovering a saucy novel. The Financial Conduct Authority is reportedly ‘alarmed’ that Musk’s gambit will test the robustness of British investor safeguards. But let us be honest: this is not about safeguards. This is about the Establishment’s terror of a man who treats rules as suggestions.
Musk is a creature of the 21st century: a buccaneer in a world of bureaucrats. He builds rockets, tunnels under cities, and sells flamethrowers. He is the sort of figure that would have been right at home in the corporate raiding 1980s. The City, meanwhile, has become a museum of financial prudence, where every transaction is triple-checked by men in grey suits who pronounce ‘risk’ as though it were a venereal disease. They have spent decades building a regulatory edifice so elaborate that it rivals the Kremlin’s. And now this interloper from California wants to flog shares in a company that loses money on every launch while promising to colonise Mars.
The ‘alarm’ is a mask for something deeper: the fear that the British investor, that sober creature of gilt-edged securities, might actually buy into this madness. The FCA has spent years insulating the little man from his own folly. It forbids crowdfunding for risky ventures, restricts access to exotic derivatives, and generally treats the retail investor like a child who must not be allowed near the matches. But Musk’s stock is a giant bonfire. If it fails, the regulator’s carefully constructed reputation for protecting the masses will go up in smoke. Hence the fuss.
But the real scandal is not that the stock is risky. It is that the City has so little to offer that it must turn to the likes of Musk to keep its pulse. London’s financial sector has been haemorrhaging IPOs to New York and Hong Kong for years. The old industries – mining, banking, oil – are either stale or socially toxic. The only growth stories are tech firms that prefer Wall Street’s deeper pockets. So when a unicorn like SpaceX deigns to list on the LSE, the City fawns like a debutante landing a duke. It cannot say no, but it cannot say yes without a fight.
Recall, if you will, the South Sea Bubble. The 18th-century British investor, dazzled by promises of unlimited returns, threw his fortune at a company that traded in ‘air’. The subsequent crash taught the English a permanent lesson about financial hubris. The FCA is essentially trying to prevent the 21st-century version of that disaster. But here is the irony: the modern regulatory state has so infantilised investors that they no longer know how to read a prospectus. They rely on the FCA to warn them. And when the FCA is conflicted – wanting the listing for prestige, but fearing the fallout – it falls into incoherence.
Musk, for his part, seems to relish the chaos. He has described the London listing as a ‘test case’ for his vision of a post-regulatory world. He wants to sell shares directly to the public, bypassing the usual intermediaries. The City’s traditional brokers are howling, but their howls are the sound of a dying order. The world is moving towards democratised finance, whether the City likes it or not.
What should be done? Let the man list. If British investors want to gamble on Mars, that is their sovereign right. The state should simply ensure transparency, not paternalism. Let the prospectus be clear: ‘Here be dragons, and exploding rockets, and negative earnings.’ Then step back. The investor who loses his shirt will learn the lesson that every Victorian financier knew: speculation carries risk. That is the price of a free market.
But the FCA will not do this, because it does not trust the public. It prefers the safety of a nursery. And so the City will continue to decay, preserved in formaldehyde, while the real action moves to places where adults are allowed to play with fire. SpaceX’s listing is a test, but not of investor safeguards. It is a test of whether London can still be a world capital of finance, or whether it has become a museum for the timid.
I suspect we already know the answer.
