London Stock Exchange sees market bouncing back
The chief executive of the London Stock Exchange (LSE) said most firms that switch their listings from the UK to US struggle to boost their share price. With London grappling with a number of firms departing, the Group's CEO, David Schwimmer, ruled out offloading its flagship bourse as he insisted the market is bouncing back.
Speaking after LSEG's annual results, Schwimer said he would not sell or spin off the LSE, and that it is a 'core part' of LSEG's strategy. Since joining from Goldman Sachs in 2018, Schwimmer has overseen LSEG's transformation into a data and analytics powerhouse. The firm acquired Refinitiv for $27bn in 2021 and entered into a 10-year strategic partnership with Microsoft the following year.
Data and analytics now comprise roughly half of LSEG's revenue, compared with less than three per cent from equities. That has given rise to speculation over the future of the 223-year-old LSE, which has been hit by heavy outflows from UK stock funds, a dearth of IPOs and large firms seeking overseas listings.
Schwimmer told reporters that LSEG's trading platforms create 'a virtuous circle' within the wider group's strategy, which is 'to provide a financial markets infrastructure and data ecosystem across the trade life cycle, across asset classes and on a global basis.'
'If you are trading on our execution venues, you are creating data,' he said. 'We provide that data to the market. The market uses that data to make decisions around more trading.'
Schwimmer said the LSE is therefore 'absolutely core to our strategy, core to our business and core to our brand' and that he is 'very, very happy to have that business'.
Stephen Yiu, a well-known retail manager building a stake in LSEG, said earlier this year that the firm should offload the London Stock Exchange and rebrand to reflect its transformation. He named Euronext and Deutsche Borse as potential bidders. Following the worst year for London IPOs since the financial crisis, Schwimmer reiterated his positive outlook for listings.
'I still feel very comfortable about the pipeline, and we can see a number of companies that are in preparation mode and evaluating their plans,' he said. 'The market continues to be fairly subdued for IPOs on a global basis.'
Schwimmer added that London remains one of the world's largest markets by capital raised when including follow-on offerings. 'This is a very healthy market, plentiful liquidity, lots of activity,' he said.
The government has hurried to revamp the regularity rule book in the hope of making London a more attractive IPO venue, including an overhaul of listings rules last summer and plans for a private stock market called Pisces.
Schwimmer said: 'When you look at the facts, you look at the strength of the London market in terms of the broader capital raising, you look at the reforms and innovations that are coming to this market, I feel very good and very confident about the direction of travel.
LSEG's annual earnings slightly surpassed analysts' estimates, with capital markets revenue soaring thanks to a strong performance from its Tradeweb platform for fixed income derivates.
LSEG said it has a 'strong pipeline' of new products under development with Microsoft as the firm's annual earnings met expectations. In its results statement, LSEG said its first products co-developed with the US giant are now generally available to customers and that it was preparing for 'increased customer adoption' this year.
In 2022, LSEG entered a 10-year strategic partnership with Microsoft – a move that saw it take a 4 per cent stake in the FTSE 100 group. Schwimmer said it had 'reached an important milestone' in the partnership and that there was 'a strong pipeline for 2025.'
The writer is our foreign correspondent based in the UK
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Observer
27-04-2025
- Observer
Listing in the US would cost double, warns LSE
The London Stock Exchange (LSE) is upping its campaign to attract more floats, warning IPO candidates that a US listing could prove expensive. In a document shared with bankers and IPO hopefuls, the LSE said underwriting fees for LSE listings can be more than double those levied by advisors in the UK. US fees typically range between 6pc and 7pc, while cost in the UK are normally between 3pc and 5pc, the LSE's analysis found. It added that companies face a 'lower litigation risk' if they are listed in London. The LSE said 3.3pc of all US-listed firms were sued in 2023, with 215 new securities class action lawsuits over the year. In comparison, the LSE found there have been just five UK class actions against London-listed firms since 2008. The LSE analysis, 'Mythbusting – UK vs US', marks the bourse's latest attempt to challenge perceptions that companies get higher valuations and better liquidity floating in New York rather than in London. A slew of big names have snubbed the LSE to debut on the New York stock exchange and Nasdaq in recent years, while several large firms already trading in London are considering moving their listings overseas. Shares in Cambridge-based chip designer Arm have surged 96pc since it listed in Nasdaq in spite of UK government lobbying efforts in September 2023. Its market capitalisation of $125.1bn would make Arm the fifth-biggest company on the FTSE 100 if it were listed in London. While acknowledging the success of Arm and London-based trading services provider Marex, the LSE found that most of the 20 UK companies that have raised more than $100m through US listings since 2014 have struggled to boost their share prices. It said four of the companies are trading higher, nine have delisted and the remaining seven are trading lower by an average of 85pc as of the end of February. The LSE analysed four large firms that have switched their primary listing from London to New York in recent years. It said it found that movements seen in discounts or premiums to peers have largely been 'moderate'. It added that this suggested any changes in valuation are due to 'industry trends rather than the change in listing'. Other findings include that London has a more diverse range of investors than the US, inclusion in Britain's FTSE indices is more likely than America's S&P 500, and liquidity is broadly the same in both countries. Last year was the worst period for London IPOs since the financial crisis, and policymakers have introduced urgent reforms designed to shore up the market. Nevertheless, despite the changes just four companies have listed in London so far this year. Singapore-based fast fashion retailor Shein and Swiss security group Verisure are among the largest companies looking to IPO this year, in what will be a test for London's allure compared to other venues. It was reported in TheTimes last month, that recent market volatility could derail Santander-backed payments firm Ebury's plans for a £2bn listing in London. LSE has added a former equities boss at Barclays to its board as it looks to quell fears about its health. Todd Sandoz has joined LSE as a non-executive director, a spokesperson for the London Stock Exchange Group confirmed. His appointment follows ex-Morgan Stanley banker Stephen O'Connor's departure at the end of last year after 11 years on the LSE board. Sandoz was chief risk officer at Hurricane Capital, a New York based multi-manager hedge fund. He joined Hurricane in August 2023 after stepping down as global co-head of equities at Barclays that February. The UK bank hired Sandoz to lead its Americas equities unit in 2018 before putting him in charge of its wider stock trading operation in 2020. Andy Jalil The writer is our foreign correspondent based in the UK
Observer
16-03-2025
- Observer
London Stock Exchange sees market bouncing back
The chief executive of the London Stock Exchange (LSE) said most firms that switch their listings from the UK to US struggle to boost their share price. With London grappling with a number of firms departing, the Group's CEO, David Schwimmer, ruled out offloading its flagship bourse as he insisted the market is bouncing back. Speaking after LSEG's annual results, Schwimer said he would not sell or spin off the LSE, and that it is a 'core part' of LSEG's strategy. Since joining from Goldman Sachs in 2018, Schwimmer has overseen LSEG's transformation into a data and analytics powerhouse. The firm acquired Refinitiv for $27bn in 2021 and entered into a 10-year strategic partnership with Microsoft the following year. Data and analytics now comprise roughly half of LSEG's revenue, compared with less than three per cent from equities. That has given rise to speculation over the future of the 223-year-old LSE, which has been hit by heavy outflows from UK stock funds, a dearth of IPOs and large firms seeking overseas listings. Schwimmer told reporters that LSEG's trading platforms create 'a virtuous circle' within the wider group's strategy, which is 'to provide a financial markets infrastructure and data ecosystem across the trade life cycle, across asset classes and on a global basis.' 'If you are trading on our execution venues, you are creating data,' he said. 'We provide that data to the market. The market uses that data to make decisions around more trading.' Schwimmer said the LSE is therefore 'absolutely core to our strategy, core to our business and core to our brand' and that he is 'very, very happy to have that business'. Stephen Yiu, a well-known retail manager building a stake in LSEG, said earlier this year that the firm should offload the London Stock Exchange and rebrand to reflect its transformation. He named Euronext and Deutsche Borse as potential bidders. Following the worst year for London IPOs since the financial crisis, Schwimmer reiterated his positive outlook for listings. 'I still feel very comfortable about the pipeline, and we can see a number of companies that are in preparation mode and evaluating their plans,' he said. 'The market continues to be fairly subdued for IPOs on a global basis.' Schwimmer added that London remains one of the world's largest markets by capital raised when including follow-on offerings. 'This is a very healthy market, plentiful liquidity, lots of activity,' he said. The government has hurried to revamp the regularity rule book in the hope of making London a more attractive IPO venue, including an overhaul of listings rules last summer and plans for a private stock market called Pisces. Schwimmer said: 'When you look at the facts, you look at the strength of the London market in terms of the broader capital raising, you look at the reforms and innovations that are coming to this market, I feel very good and very confident about the direction of travel. LSEG's annual earnings slightly surpassed analysts' estimates, with capital markets revenue soaring thanks to a strong performance from its Tradeweb platform for fixed income derivates. LSEG said it has a 'strong pipeline' of new products under development with Microsoft as the firm's annual earnings met expectations. In its results statement, LSEG said its first products co-developed with the US giant are now generally available to customers and that it was preparing for 'increased customer adoption' this year. In 2022, LSEG entered a 10-year strategic partnership with Microsoft – a move that saw it take a 4 per cent stake in the FTSE 100 group. Schwimmer said it had 'reached an important milestone' in the partnership and that there was 'a strong pipeline for 2025.' The writer is our foreign correspondent based in the UK
Observer
21-01-2025
- Observer
Finance bosses call for action on stock market exodus
The UK government is facing fresh calls to accelerate its reform of rules in London's financial district (known as the 'City') and stem the exodus of cash away from London's markets, as the new Lord Mayor, Alastair King, urged ministers to develop a more supportive tax and regulatory environment. Alastair King urged Prime Minister Keir Starmer to go faster with efforts to boost investment into London listed firms, claiming the government's current plans are not going 'far enough'. 'It cannot be logically correct that, as it stands, we do not pay taxes on purchases of international vehicles such as Tesla, but we are taxed on investing in a British brand like Aston Martin,' King said, referring to the stamp duty of 0.5pc tax levied on UK share trading. Changing this 'misalignment' would provide a 'shot in the arm for home grown companies looking to scale up', he added. Meanwhile, the boss Steven Fine, of Peel Hunt, a leading UK investment bank, said that firmer measures should be taken to reverse the 'exodus' of investors from UK focused equity funds, adding that ministers should offer tax breaks to encourage a 'home market bias'. The calls could revive the debate around stamp duty on share trading after years of demand for it to be eased or dropped entirely The boss of London Stock Exchange (LSE), Julia Hoggett, described the tax as 'pernicious' earlier this year while fund management group Abrdn and trade body, the Quoted Companies Alliance (QCA), also called for the charge to be retired for FTSE 250 companies. 'Scrapping stamp duty on share trading would send out a powerful signal that the UK and the financial district of London (The 'City') are open for business,' QCA chief executive, James Ashton said, adding that there was no equivalent in the US or Germany (the powerhouse of the EU). The mayor also called for ministers to encourage more retail investors into stocks and shares ISAs and urged the Chancellor Rachel Reeves to go further in her plans for pension fund reform. Reeves has outlined plans to consolidate the UK's sprawling local government pension systems in a bid to fuel investment. She said that unleashing a wave of investment from pension funds will be at the heart of the government's 'growth mission'. 'Growth is our number one mission and reinvigorating our capital markets is key to delivering that', a Treasury spokesperson said. Another LSE-listed firm waved through a take-private deal in the latest of a torrent of exits from the City's bourse. Learning Technologies, an AIM (Alternative Investment Market) listed edtech company, agreed to an £836m takeover from US private equity giant General Atlantic, making it one of 45 listed companies to sell-up or enter talks with a suitor. According to numbers compiled by Peel Hunt, the total value of take-private deals has now reached a record £52bn in value. Including exits from the LSC and companies swapping their listings to overseas markets, the total value of companies leaving the market is set to go above £100bn according to figures from Peel Hunt. London's AIM market has felt the brunt of exits in the past year with the total number of companies on the market shrinking to below 700 for the first time since 2001, according to accountancy firm UHY Hacker Young. A total of 16 AIM-listed companies have been bought by private companies last year. London markets faced further scrutiny last month after Pallister Capital renewed its call for Rio Tinto to abandon its primary London listing, arguing its corporate structure had cost shareholders $50bn (£39.4bn) in value. In a letter to the board, reported by the Financial Times, Pallister Capital said Rio Tinto's dual listing in London and Sydney had been an 'unmitigated failure'.
