CNBC's UK Exchange newsletter: Compass shifts its trading to dollars — and it might not be the last

This report is from this week's CNBC's UK Exchange newsletter. Like what you see? You can subscribe here.

The dispatch

Compass is that rare beast —  a British company that is a genuine world leader in its field.

The world's biggest contract caterer, which annually serves 5.5 billion meals in schools, colleges, workplaces, hospitals and sporting venues in more than 25 countries, is considered a well-run business.

Accordingly, its trading updates tend not to excite, routinely consisting of news on organic sales growth, margin improvements and — with workplace catering operations gradually being outsourced around the world — new business wins.

Last week's update, though, brought something more eyebrow-raising as Compass announced that, from April 1, it will change the currency in which its shares are traded from sterling to the U.S. dollar.

The company explained that having reported in dollars since October 2023, the measure would align its share price trading currency with its reporting currency, "reducing FX volatility in the share price and simplifying the investment case for global investors."

Cue hand-wringing over how Compass — which derives around three-quarters of its revenues in dollars — could be the next big U.K. company to abandon London for the New York Stock Exchange.

Protests from Compass that it would continue to pay dividends in sterling, unless shareholders elect to receive them in dollars, fell on deaf ears.

Compass was, in fact, taking advantage of a relatively recent change to the so-called "ground rules" governing membership of indices overseen by FTSE Russell, part of LSEG, the owner of the London Stock Exchange.

Announced in March 2025, and coming into force last September, it allowed for companies whose shares trade in dollars or euros "to be considered for potential inclusion to the FTSE U.K. Index Series."

In doing so, London has shown considerably more flexibility than some other major financial centers. The New York Stock Exchange, for example, insists that all NYSE-listed shares are quoted, traded and settled exclusively in dollars.

The first company to take advantage of the rule change, in January this year, was InterContinental Hotels Group, the parent of the Holiday Inn and Crowne Plaza hotel brands, which derives some 80% of its revenues and operating profits in dollars. If anything, it is even more British than Compass, dating back 249 years in the country. It is also proud of having registered the U.K.'s first trademark — the famous Bass red triangle — in 1875.

'The accounts were not acceptable'

In a sense, changing the currency in which a company's shares are traded is the logical next step in a process that began many years ago.

When companies were allowed to publish their report and accounts in currencies other than sterling, many started to do so. The three biggest companies in the FTSE 100 by market capitalization — HSBC, AstraZeneca and Shell — all now report in dollars. Unilever, the fourth largest, reports in euros. Others in the FTSE's top 20 reporting in dollars include the miners Rio Tinto, Glencore and Anglo American, the oil major BP and the international bank Standard Chartered.

It is not a recent development. As long ago as 1989, the car rental company Avis Europe began accounting in the old European Currency Unit (ecu), the synthetic currency which later evolved into the euro. 

The move caused some complications for the business at the time. Alun Cathcart, the chairman and chief executive, told the annual Ecu Banking Association meeting at Copenhagen in June 1991 that, when Avis Europe had first submitted its report and accounts for 1990-91, the U.K. authorities refused to accept them.

He recounted: "We were asked to produce coins and notes, and if we couldn't, the accounts were not acceptable.

"They were prepared to accept a report in Icelandic crowns or Australian dollars, but not in ecu."

When in April 1997, Avis Europe floated on the stock market, it became the first London-listed company to report in ecus.

At the time, though, Avis Europe was very much an outlier. Other U.K. corporate stalwarts have only made the switch relatively recently. Shell began reporting its results solely in dollars at the beginning of 1998, explicitly doing so to encourage meaningful comparisons with U.S. rivals, with BP following suit a year later.

In the same sector, BG Group, the gas exploration and production company spun out of the old British Gas and acquired by Shell in 2015, began dollar reporting in 2009.

All were beaten by Rio Tinto, which has been listed longer in London than any other of the major global mining companies. It embraced the greenback following the merger in late 1995 of the old London-listed Rio Tinto Zinc (RTZ) and its 49%-owned Australian associate Conzinc Riotinto of Australia (CRA).

So it is surprising that the announcement from Compass last week caused such pearl-clutching. Perhaps the bigger surprise should be that British multinationals like GSK, British American Tobacco, Rolls-Royce, Diageo, RELX and Reckitt Benckiser, despite making most of their money overseas, remain loyal to the good old pound.

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Need to know

UK’s latest political standoff threatens to put a ‘Damocles sword’ over the country's bond market, Jordan Rochester, head of FICC strategy at Mizuho EMEA, said in a Monday note. The prospect of a leadership challenge could upend the policy path laid down by Starmer and his finance minister, Rachel Reeves, which poses a significant risk to gilt investors.

Jeffrey Epstein has sparked a political crisis threatening the UK government. The release of further Epstein files last week triggered a series of events that left U.K. Prime Minister Keir Starmer fighting for his political life, despite the fact that he never knew the late financier and sex offender.

China lashes out at the UK's expansion of a scheme for Hong Kong residents to apply for the British National Overseas, or BNO visa, calling it "despicable" and "reprehensible." The U.K.'s move comes after a Hong Kong court sentenced pro-democracy media tycoon Jimmy Lai to 20 years in prison under a national security law.

Quote of the week

In the markets

The FTSE 100 has traded lower over the past week, closing Tuesday at 10,353.84, compared to 10,402.34 a week ago. Britain's blue-chip index finished yesterday's session down about 0.3% on the day.

The British pound, meanwhile, rose slightly against the dollar this week, trading at $1.3665, up from $1.3650 last Wednesday, as yields on the U.K. government's benchmark 10-year bonds — also known as gilts — dipped over the same period, finishing Tuesday at 4.495%, compared to 4.552% a week ago.

The performance of the Financial Times Stock Exchange 100 Index over the past year.

— Hugh Leask

Coming up

Feb. 12: GDP preliminary estimate for 4Q

Feb. 17: Unemployment data for December

Feb. 18: CPI for January