The fragility nobody talks about
Imagine waking up tomorrow to find that Mastercard, Visa, and American Express have suspended operations across Europe. Not a cyberattack. Not a technical failure. A geopolitical rupture — a sanctions directive, an executive order, a bilateral dispute entirely unrelated to European consumers — and consumer payment infrastructure across much of the continent faces severe disruption overnight.
Far-fetched? Perhaps. But not impossible. A sanctions directive, executive order, or geopolitical crisis of sufficient severity could force payment networks headquartered abroad to suspend service — and the architecture that would permit it exists right now. The world's most critical commercial infrastructure is overwhelmingly controlled by companies headquartered in jurisdictions whose political priorities may differ fundamentally from those of the economies they serve.1 Their decision-making lies thousands of miles away. Their accountability runs to shareholders in New York, Seoul, and Beijing — not to the employees, customers, and suppliers whose livelihoods depend on their continued presence.
The geopolitical world is fragmenting faster than regulatory frameworks can follow. The era when globalisation was assumed to be irreversible is over. In its place: a world where one country's domestic politics can sever another country's economic nervous system. That demands a structural response. And the most market-friendly instrument available is one financial markets have long understood — the stock exchange listing.
"The modern global economy has been built on a foundation that can be switched off at the speed of a press release."
The stranded stakeholder problem
In February 2022, Russia invaded Ukraine. Within weeks, over a thousand global corporations announced exits.2 McDonald's, Mercedes-Benz, IKEA, H&M — decades of embedded operations unwound by board decisions made in Illinois, Stuttgart, and Stockholm. Russian employees arrived at work to find the lights going out. Local suppliers lost their largest customers without notice. Consumers found shelves emptying of brands they had used their entire adult lives.
Reuters estimated cumulative writedowns and lost revenues exceeding $107 billion across Western companies that exited or curtailed Russian operations.3 But the more consequential figure may be the near-absence of legal mechanisms allowing local stakeholders to challenge the strategic decision to withdraw. The decision to leave was made by boards answerable to shareholders in other countries, under pressure from governments in other countries, in response to events in yet another country. Local stakeholders had no meaningful standing in that process.
TikTok in the United States tells the same story from a different angle. A platform with 170 million American users — including hundreds of thousands of small businesses and creators whose livelihoods depended on it — nearly switched off because of a bilateral dispute between Washington and Beijing.5 American users had limited direct influence over a decision affecting their livelihoods. While creators and the platform itself brought First Amendment challenges, the process unfolded overwhelmingly on national security grounds that left ordinary users — and the small businesses built on the platform — largely without recourse.
"The deeper a company becomes embedded in an economy, the faster it can leave — and the less warning it is required to give."
The threshold question: who should this apply to?
The instinct to draw the line at 500 employees is understandable but insufficient on its own. Mastercard employs relatively few people in any single European country — yet its absence would be existential for the continent's payment infrastructure. Apple and Samsung consistently rank among the largest smartphone vendors in Europe, listed in the US and South Korea respectively.6 Regulatory action affecting major platform providers of this kind could create cascading disruption across digital commerce ecosystems spanning dozens of countries.
The threshold needs three legs — any one of which triggers the obligation:
Employees
500 or more employees in the country — capturing operational depth and labour market dependency.
Revenue Share
Revenue exceeding a defined percentage of national GDP or sector revenue — capturing financial footprint regardless of headcount.
Market Share
Dominant position in a national market — capturing influence over consumers and competitors that revenue alone may understate.
Critical Sector Override
Any company operating in payments, cloud infrastructure, telecoms, pharmaceuticals, or food supply — regardless of headcount or revenue. No threshold required.
The critical sector designation is arguably the most important leg. It captures the Mastercard problem — companies that are systemically important without being large local employers. It also future-proofs the regulation: as digital infrastructure deepens, the list of critical sectors will expand, and the framework accommodates that without requiring legislative revision each time.
Accountability proportional to embeddedness
When a foreign company first enters a market, it is a guest. As it grows, something changes. It becomes woven into the fabric of the local economy — its supply chains are local, its workforce is local, its customers have built their lives around its products. At some point, it stops being a guest and starts being infrastructure.
That transition should trigger obligations. Not because the company has done anything wrong, but because it has made a choice: it has chosen to embed itself so deeply in a society that its presence is no longer separable from that society's functioning. The social contract demands that this choice carry accountability proportional to the dependency it has created.
Local stock exchange listing operationalises this principle. It is not punitive. It is proportional. It says: you have chosen to become part of this economy. Now demonstrate that commitment through the most credible signal a market economy has — financial accountability to local stakeholders.
This has been done before — just more crudely
The principle that operational presence in a country creates obligations to that country is not new. It has been exercised by major economies for decades — through instruments far blunter than a stock exchange listing.
Gulf ownership mandates
The UAE required 51% Emirati ownership of mainland companies for decades.7 Saudi Arabia historically restricted foreign ownership across multiple sectors and frequently required local participation depending on sector and licensing category — a patchwork of requirements that reflected the same sovereignty instinct, even without a single universal rule.8 Market access in exchange for equity — blunt, effective, and eventually constraining of the very investment it sought to attract.
China's joint venture requirements
Since 1994, every foreign carmaker entering China — Volkswagen, GM, BMW, Toyota — was required to form a 50:50 joint venture with a domestic partner and transfer technology.9 Restrictions began to be gradually removed from 2018, beginning with electric vehicle manufacturers, culminating in the full removal of joint venture requirements by 2022.10 The policy was explicit: market access in exchange for substance. China's domestic automotive industry — including BYD — was built in part on knowledge extracted through these arrangements.
Local listing requirements
More market-friendly. Less distortionary. Achieving the same foundational goal: ensuring that companies which embed themselves in an economy leave something real behind — not equity extracted through a local partner, but financial accountability through public markets, disclosure obligations, and local shareholder standing.
"But Gulf countries and China relaxed those rules"
This is the most predictable counterargument, and it rests on a misreading of why those rules were relaxed.
The UAE did not abolish the 51% local ownership requirement because the principle was wrong. It abolished it because the goal had largely been achieved — local business sophistication had developed, the economy had diversified, and the blunt instrument of mandatory local ownership was deterring the fresh foreign direct investment needed for the next phase of growth.11 The UAE then simultaneously accelerated efforts to deepen domestic capital markets — not retreating from the sovereignty goal, but upgrading the instrument.
China did not abandon joint venture requirements because technology transfer was a bad idea. It abandoned them because Chinese companies — particularly in electric vehicles — had become globally competitive.12 The student no longer needed the mandatory classroom. Chinese EV firms are now entering partnerships in which foreign automakers seek access to Chinese technology. The direction of knowledge flow has reversed entirely.
"They did not abandon the goal. They achieved it — and upgraded the mechanism."
Saudi Arabia's progressive relaxation of sector restrictions under Vision 2030, combined with an explicit push to deepen Tadawul as a capital market, reflects the same underlying logic: the instrument upgraded from blunt ownership rules to market-based accountability, but the sovereignty goal remained constant. Indonesia's local content laws in natural resources, Nigeria's oil and gas participation requirements, and India's FDI caps in retail and media all represent the same instinct expressed in different national contexts.
The United States did this first — from the other direction
For decades, the United States has required that any foreign company wishing to access US capital markets through American Depositary Receipts must file with the SEC, comply with SEC disclosure requirements, report under approved accounting frameworks — IFRS or US GAAP — submit to US securities law, and potentially expose itself to class action litigation in American courts.13 Nobody called it protectionism. It was framed as investor protection and market integrity.
ADR Requirements — Capital Side
Local Listing — Operational Side
The US went further still. The Foreign Corrupt Practices Act applies to any company with US securities listed or US operations — extraterritorial reach used entirely unapologetically.14 FATCA forces foreign banks globally to report US account holders or face punitive withholding taxes that effectively restrict access to US financial markets.15 The United States progressively built an extraterritorial legal architecture through capital market access rules, embedding American regulatory reach far beyond its borders.
The asymmetry is stark. A foreign company listing in New York accepts US jurisdiction entirely. A US company employing 50,000 people in Europe accepts extensive operational regulation — corporate tax, labour law, GDPR, competition law, environmental standards — but often remains entirely insulated from local capital market accountability. That is not a natural law. It is a historical accident that can be corrected.
What local listing actually does
The power of local listing is not simply that it creates transparency — it is that it uses market pricing to do regulatory work. When a local entity must disclose its relationship with its parent, the market processes that information and prices it into the valuation. That valuation then becomes a signal — to regulators, customers, suppliers, and employees — about the true fragility or resilience of the operation.
Mandatory local disclosure
Audited local financials, intercompany arrangements, IP ownership structure, and operational dependencies on the parent must be published. Transfer pricing arrangements — the primary mechanism for hollowing out local entities — become visible to markets and regulators.
Analyst scrutiny and market pricing
Local analysts cover the stock. Earnings calls force management to answer questions about intercompany margins and local reinvestment. A hollowed-out local entity will be priced accordingly — depressed valuation relative to peers.
Valuation as fragility signal
A chronically depressed local valuation becomes a public signal of operational fragility — visible to regulators, government procurement offices, and critical infrastructure designators as an input to oversight decisions.
Local legal standing
Local shareholders — pension funds, institutional investors, retail investors — gain a formal stake and visibility into decisions that affect the local entity. A parent attempting to strip assets or force a sudden exit would face additional procedural friction, disclosure obligations, and potential avenues for shareholder challenge — the precise scope depending on jurisdiction and subsidiary structure, but a meaningful constraint that currently does not exist.
Substance forcing
To maintain a credible valuation, companies must ensure the local entity has real substance — genuine assets, meaningful decision-making authority, local reinvestment. The listing becomes a forcing function for operational localisation, not merely financial disclosure.
The cloud infrastructure parallel is instructive. Data localisation rules forced companies to put physical substance in countries — servers, data centres, local infrastructure. Local listing requirements do the same thing financially: they force disclosure of whether economic substance is actually local. The two instruments together create a comprehensive accountability framework.
Why companies should want this too
Local listing is a regulation. It imposes compliance costs and disclosure obligations. Companies will resist it. But the most forward-thinking multinationals operating in an increasingly fragmented world may find it also solves problems they already have.
A locally listed European subsidiary of a US tech company, with European pension funds owning 30% of it, creates additional legal, political, and procedural barriers that make unilateral intervention by the home jurisdiction more costly and more complex. Local listing creates a political shield as much as an accountability mechanism. It is protection from home country politics that the parent company cannot easily provide on its own.
The valuation unlock is also material. Multinationals frequently trade at a discount because investors cannot properly value individual market operations — the so-called conglomerate discount. A separately listed local entity allows the market to price the business in that geography, potentially unlocking significant hidden value.
Local listing also opens access to local institutional capital — sovereign wealth funds, pension funds, insurance companies that have mandates to invest locally and cannot access a foreign-listed entity. In the Gulf, this pool is enormous. In Southeast Asia, it is growing rapidly. A locally listed subsidiary is the door to that capital.
And in geopolitically turbulent times, a locally listed entity creates additional procedural friction, disclosure obligations, and potential avenues for shareholder challenge against arbitrary closure by the parent. That friction is an asset. It is what operationally separates "we are committed to this market" from a press release.
Jobs, markets, ownership — the local opportunity
The case for local listing is not only about accountability and sovereignty. It is also about opportunity. Requiring large foreign companies to list locally would catalyse financial ecosystems in ways that compound over time.
| Sector | Opportunities Created |
|---|---|
| Investment Banking | IPO structuring, underwriting, ongoing capital markets advisory for local subsidiaries of global companies |
| Market Making | Liquidity provision for newly listed entities; bid-ask spread business in markets that previously had thin volume |
| Audit & Accounting | Mandatory local audits expand Big Four and mid-tier local practices; local accounting standards expertise grows |
| Legal Services | Securities law, corporate governance, shareholder litigation — an entirely new practice area in many markets |
| Investor Relations | Local IR professionals and advisory boutiques serving foreign subsidiaries navigating local investor communities |
| Regulation | Securities regulators expand and professionalise; stock exchange infrastructure investment accelerates |
| Corporate Governance | Local independent directors with fiduciary duties to local shareholders; a professional non-executive director class develops |
| Retail Investment | Local populations own stakes in the global companies they use daily — participating in value creation they enable as customers and employees |
The most structurally important benefit is the compounding effect on local capital markets. More listings mean more liquidity. More liquidity attracts more institutional investors. More institutional investors demand more listings. This is how mature capital markets develop — and it is how many emerging markets have been trying, largely unsuccessfully, to kickstart the process for decades. Mandatory local listing of large foreign subsidiaries would hand them a catalyst that organic market development has failed to provide.
"When locals can own stakes in the companies they depend on, they become stakeholders rather than bystanders."
When a local population can buy shares in the global companies embedded in their economy, they become stakeholders rather than bystanders. A French retail investor owning shares in Amazon's European entity has a materially different relationship with that company than a customer who can only respond by deleting their account. Ownership creates voice. Voice creates accountability. Accountability creates resilience. And resilient local shareholding also supports the global parent's valuation — a loyal, informed local investor base that understands the business intimately is precisely what long-term institutional shareholders want to see.
Sovereignty and society — both, simultaneously
This proposal is sometimes framed as a choice between two framings: economic sovereignty — a state asserting control over its economic destiny — or consumer and societal protection — shielding citizens from the consequences of corporate decisions made elsewhere. That is a false dichotomy.
Sovereignty without societal buy-in is nationalism — easy to dismiss as protectionism. Societal protection without sovereignty framing is consumer rights — easy to water down with industry lobbying. Together they constitute a constitutional argument: that a state has both the right and the obligation to protect the economic fabric that its citizens have built their lives around.
This is not a new argument. It is the argument that produced banking regulation after 2008 — when systemically important institutions could not be allowed to fail society, so democratic sovereignty over them was asserted. It is the argument that produced utility regulation in the twentieth century — when private companies became too embedded in daily life to be treated as purely private decisions. It is the argument that produced media ownership rules — when foreign control of information infrastructure was deemed a sovereignty issue with direct societal consequences.
We are at the same inflection point now with digital platforms, payment networks, cloud infrastructure, and pharmaceutical supply chains. The question is not whether to act — it is whether to act before the next rupture makes the cost of inaction undeniable.
Addressing the protectionism charge
The protectionism charge will come. It should be met directly.
Protectionism keeps foreign companies out. This proposal does the opposite — it welcomes companies that have already chosen to embed themselves deeply in an economy, and asks only that commitment be matched by accountability. Companies that have not crossed the threshold can continue operating exactly as before. The regulation targets presence, not nationality.
The local entity structure already exists. Companies including Grab and Sea Limited in Southeast Asia already run country-level subsidiaries for tax and regulatory reasons.18 The architecture is in place. What local listing adds is financial accountability layered on top of an existing structure — not a fundamentally new operating model.
The practical objection — that companies will hollow out local entities, keeping IP and decision-making in the parent — is real but answerable. A hollowed-out local entity will have a depressed valuation. A depressed valuation is a public signal. That signal invites regulatory scrutiny, analyst pressure, and shareholder activism. The market itself becomes the enforcement mechanism. This is more durable than prescriptive rules about which assets must be held locally, because it aligns incentives rather than mandating compliance.
Finally: the threshold is a choice. Companies cross it because the market is worth it. The obligation that comes with crossing it is the price of that choice. That is not protectionism. That is a social contract.