Saudi Arabia is considering floating a 5 percent stake in Aramco in London or New York. It is expected to be the biggest IPO ever and boost the reputation of its chosen venue.
But the possible listing has been met with resistance from British fund managers concerned about governance. It would require the Financial Conduct Authority (FCA) to relax certain rules, including that companies float at least 25 percent of their shares - a power not used in the FCA's four-year history.
The FCA proposed in July a new category of sovereign-controlled firms seeking a so-called premium listing that would allow them to circumvent that requirement, among others.
That raised questions around whether the government, keen to promote Britain's financial sector as the country leaves the European Union, had influenced it to try to secure Aramco's IPO.
Parliament's Treasury Select Committee wrote to FCA chief executive Andrew Bailey in September, asking if ministers had been consulted on the plans.
Speaking before the committee on Tuesday, Bailey said he had not had conversations with the chancellor about making London more attractive to companies such as Aramco.
The only talks with government officials on the proposals had been on the timing of their announcement, Bailey said.
Asked if Prime Minister Theresa May had been involved in trying to encourage Aramco to list in London, Bailey said: "Not to my knowledge".
NOT ABOUT ONE COMPANY
Bailey said the 25 percent requirement was not a "hard and fast" rule and that he was open to all views on the issue.
The test would be to show that floating a 5 percent stake would create a market in the company's shares that was liquid enough, he said.
"We are talking about a very large entity in this case. I want to be clear this policy is not about one company," Bailey said.
"We're open now to taking it forward, we're not closed minded about this," he said, adding a consultation on the proposals had received many responses on both sides of the argument.
Bailey also said he had met with the chief financial officer of Aramco in January.
In the following month, the FCA first aired the possibility of a new "international" listings category that would be attractive to founding families or governments that want to retain control rights over the company being listed.
"We should be prepared to turn away anybody that doesn't meet the standards that we want. This is all about what standards we want, and then we make the judgements accordingly," Bailey told MPs.
Some investors have said the changes could harm minority shareholders.
At present, companies that do not meet Britain's premium listing requirements must take a standard listing which is seen as second best as it has lower corporate governance requirements and does not qualify for entry into most stock indices.
(Additional reporting by Huw Jones; Editing by Mark Potter)
By Emma Rumney