January 30, 2024, 07:43 | Updated: January 30, 2024, 07:45
Look around the London exchanges and you’ll see a wealth of business talent, writes David Buick.
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- David Buik is LBC’s market commentator
When Clara Firth became CEO of the London Stock Exchange in 2001, she spent much of her tenure fighting takeover bids from the United States, the Middle East, and Europe. As a result, the exchange’s share price rose from her £5 per share to £20. again.
To the average market observer, she and her management team have not taken London to the rest of the world. Nor did it have a major impact on London’s overseas business, with the exception of Italy’s Bolsa Italiana, which offered a modest selection.
During the eight-year Xavier Lorre dynasty from 2009 to 2017, the LSE’s business declined as CEO Lorre brought sales momentum and lifted the share price on London’s Premier Exchange from about £4 to about £37. Selected new gear. Since then, LSE’s technology and its $27 billion acquisition of Refinitiv in 2021 appear to have fueled the stock’s big rally.
In recent years, it has been accurately documented that London has ceded some of its market share related to multi-billion dollar deals to New York, but New York has far more access to large global investors. This is natural since it is excellent at The negative perception drawn by BREXIT is also having a negative impact on companies seeking public quotations in London.
The government must bear some of the blame for failing to take advantage of the potential benefits of BREXIT, such as tax relief benefits and tax relief.
And despite significant efforts by Lord Hill and others who published recommendations from the UK Listing Review launched by the Treasury in November 2020, the government has been painfully slow to introduce more flexible regulatory requirements. There wasn’t.
It is also no exaggeration to say that COVID-19 has significantly damaged the prospects for many potential IPO transactions around the world.
Large-cap IPOS heading to New York continues to be read. But we must not forget that there are many amazing and innovative companies, especially those in the technology business, who are yet to receive the support, encouragement and loving care they deserve from the LSE’s AIM business. It means to do it.
Opportunities are wide-ranging. Aquis Exchange illustrated the opportunity to bring some exciting companies into the public eye. There are many other things that require investment and financing.
Aquis Exchange, the pan-European online exchange, is thinking about IPOS and the future of stock trading around the need for competition to drive market innovation and make markets fit for purpose.
The current market structure has been in place for decades and has clearly not been as open to disruption and technological advances as other markets.
If the UK wants the deep pool of capital and level of retail involvement available in the US, it will need to restructure the competitive landscape, such as that between the NYSE and Nasdaq.
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How can we achieve this? The key to stimulating public markets is to focus on the growing companies that are the future of the economy. Is it any wonder that a company of LSEG’s size seems to struggle to foster the development of small, dynamically growing companies?
Perhaps LSEG is a victim of the success of the past 50 years. But it is clear that something new is needed to stop the current stagnation, and the incumbents cannot be the disruptors/challengers. Competition is needed in all sectors to drive innovation and evolve. Capital markets are no exception.
The only slight difference is that since it is a regulated ecosystem, regulators will also need to help stimulate new and dynamic approaches.
If London is to reap the benefits of a vibrant capital market, stock trading and IPOS, it needs to strengthen significantly. We need to be bolder in our approach.
The appetite for risk has disappeared to an unacceptable level. A much stronger risk-reward approach is required. Individual investors hold the key to this painful situation.
In the US, retail investors make up nearly 40% of the market. In the UK it is 10%. My case remains. Private investors must be encouraged to play a leading role in capital markets as shareholders and investors. Increased retail participation creates significant liquidity. A proper shareholder register is the cornerstone of organized and sound market practices. Aquis Exchange is currently pioneering this effort.
This initiative should be adopted by all UK exchanges. Without this bold approach, London, currently a worthy standard-bearer of financial markets, will begin to drift into the abyss of anonymity. Our cry to everyone is “WAKE UP!”
David Buik is LBC’s markets and business commentator.
Photo: LBC
Alasdair Haines, CEO of Aquis Exchange, gave a great analogy for the London Stock Exchange’s dilemma. “BA removed the Union Jack from the airline to show that it is an international airline. We put the Union Jack on the airline.”
I would like to say to all exchanges, there are many great businesses that you can support and pop up in your own backyard. Please start cultivating actively. Only jam comes from overseas business! ”
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