When so many companies are leaving the LSE and AIM to go private, why does LSEG believe it it well placed to deliver a better outcome for growth companieas on its new Intermittent Trading Venue (ITV)?
There is a lot of excitement about the opportunity presented by an intermittent trading venue – it has real potential to be transformative for private companies. The development of such a regulation in the UK would have the potential to supercharge the scaling of our venture financing ecosystem.
This is about providing companies with choice in addition to existing public and private market options for liquidity, depending on where they are in their development and lifecycle, what their growth plans are and how they wish to evolve their shareholder base.
It will allow companies, every once in a while, to provide the opportunity to new and existing shareholders to transact through a controlled and efficient mechanism of a stock exchange auction. For those short periods of time, professional investors would get the information and protections more usually associated with a public market when deciding whether to come in or out of share registers.
Intermittent is the key word – it will not be a primary capital raising venue and companies will remain private outside of these trading intervals.
It has been rumoured that you are looking for a minimum market cap of £50m to participate in the ITV. Given that would exclude so many UK listed companies in today’s market, what sort of signal is that sending?
We have not heard that rumour and are not aware of any discussions on imposing a minimum or maximum capitalisation.
Are you abandoning AIM as not fit for purpose?
No. AIM is the most successful growth market in Europe and a key part of the financing infrastructure of the UK, critical to a wide range of UK and international companies. Since its launch almost 30 years ago, over 4,000 companies have used AIM to take the next step in their growth journey, raising around £135 billion in that time. We continue to see a strong pipeline of companies from around the world that are interested in joining the market.
How many LSE & AIM listed companies do you think need to delist to give the market integrity?
This is not about delisting companies from the LSE or AIM to utilise the intermittent trading venue. One of the key aims of the new market is to offer a more efficient capital table management tool to companies that are not yet ready, or do not have a need, to join the public markets.
What’s your view on EIS, SEIS and VCTs? Do they have a future in helping maintain London’s standing on the global capital markets stage?
Unlocking growth capital for emerging UK businesses is one of the central areas of focus for the Capital Markets Industry Taskforce, an initiative of which we are a founding member.
It is important that the broader market structure and taxation regime encourages investment into early-stage companies as these are vital for the long-term health of the UK economy. These schemes have been instrumental in supporting the vibrant start-up environment we have here in the UK. However, we also need to ensure that the right mechanisms are in place to incentivise these companies not just to start but to scale.
What do you think innovators like Aquis or Archax can bring to the table? It’s fair to say the LSEG isn’t exactly renowned for innovating to grow, it’s more a story of acquisition, so when we have disruptive challengers in play are you encouraging them to join the fight, or looking to out manoeuvre them?
We firmly believe competition is good for the markets and something we welcome. We have been at the forefront of market innovation for decades – the success of AIM, the International Securities Market which recently welcomed its 1,000 bond this year and our Sustainable Finance markets, which include the Voluntary Carbon Market, are just a few examples.
HMT’s proposal for an Intermittent Trading Venue is to create a regulation that any appropriately regulated venue could use - and we fully anticipate others would look to do so too.
What are you doing to lower the cumbersome fixed costs associated with running a listing?
A number of the reforms being proposed by the FCA should reduce ongoing costs for listed issuers. For example, the Primary Markets Effectiveness review has the potential to lower the cost and time burden associated with follow-on capital raising.
It is critical, however, not to look just at reducing the costs of listing alone. We continually work with founders, management teams, companies and market users to ensure the benefits of listing and using public markets far exceed any associated costs. This is about deepening the pool of capital and liquidity available through the markets that ultimately results in a lower cost of capital for businesses.
Does the LSEG risk being perceived as monopolistic given its already dominant position, its running of the Capital Markets Industry Taskforce and its close ties with cornerstone public entities ranging from the FCA to the BoE and the Treasury - despite being a private company in its own right?
We believe that the UK Capital Markets have a fundamental role to play in supporting UK companies to gain access to the capital they need to grow and scale in order to produce the jobs, products and innovation that will continue to power our economy. As a convenor of capital, the London Stock Exchange has a responsibility to seek to advocate for and support the continued evolution of our capital markets to meet the needs of our economy and the UK’s place as a global financial centre.