The UK’s financial watchdog the Financial Conduct Authority (FCA) has defended its decision to create a new listing category for companies owned by sovereign states.

The change has been widely interpreted as an effort to clear the way for a listing of Saudi Arabia’s state-owned oil company Aramco on the London Stock Exchange.

Some commentators have claimed that the proposed changes could expose UK shareholders to companies with lower levels of corporate governance.

Speaking to Reuters, Andrew Bailey, chief executive of the Financial Conduct Authority, said: “Some of the commentary from some of the people has suggested that the premium listing category is monolithic and therefore we’re compromising the whole premium listing category, which we’re not, because it’s actually a series of categories under the premium listing.”

Bailey insisted the FCA wanted to see London markets innovate “transparently and safely”.

Members of the House of Commons have written to the FCA asking for reassurance that changes to listing regulations would not threaten the quality of UK governance.

Bailey said he would reply to the letter.