ONDON Stock Exchange Group boss David Schwimmer today hit back against the pessimists talking down the City, insisting it will continue to fend off rivals and remain the premier financial centre in Europe.
With the FTSE 100 drifting and few new flotations lately — ARM just chose New York to list in search of a better valuations — banks and brokers have been starved of business. The LSEG is also under pressure over a new Intermittent Trading Venue (ITV) which critics stay stifles innovation and favours the incumbent’s monopoly position.
Talking to the Standard, Schwimmer points out that London remains the most active in Europe — this year alone it has raised 75% more than capital than its next largest rival, Amsterdam.
Moreover, UK companies that list in the US tend to underperform, with Manchester United a rare success story.
Schwimmer says the ITV will boost liquidity for smaller companies by introducing them to new shareholders before they are ready to fully join public markets in ways that “have the potential to supercharge the scaling of our venture financing ecosystem”.
“The City has a way of reinventing itself. It has done so over hundreds of years,” he said.
He dismissed the rumour that firms will need a minimum market value of £50 million to participate in the ITV and says AIM is not being scrapped.
He said: “AIM is the most successful growth market in Europe and a key part of the financing infrastructure of the UK. Since its launch almost 30 years ago, over 4000 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 interested in joining the market.”
Schwimmer, above, an ex-Goldman Sachs man and CEO since August 2018 notes that the focus on stock markets is understandable, but overdone since fewer than 1% of companies are listed.
Insurance, currency trading, financial advice, clearing and legal services have all emerged strongly from Covid, he notes. With the Government and regulators looking for ways to boost small firms and encourage pension funds to be more bold, the future for the Square Mile looks as bright as he can remember.
Russ Mould at AJ Bell says: “There are good reasons why the knocking copy about London feels overdone, even if losing out on the ARM deal is undeniably a blow. London still has a lot going for it. It offers a perfect location and time zone, an independent central bank, a floating, fungible and cheap currency, a great financial ecosystem of brokers, banks, advisers, lawyers and advisers and a mercantilist culture.”
Microsoft took a 4% stake in the LSEG group earlier this year, evidence of its tech appeal, says the CEO.