For the London market to succeed, it must cease consuming itself
T
oo many headlines over the past 12 months have proclaimed the premature demise of London as a capital elevating venue.
A dearth of IPOs (hardly shocking given rising charges and financial uncertainty), a perception that listings within the US present the silver bullet (WANDisco, right here’s you) and ongoing gripes over the constrained and cumbersome processes which can be required to match patrons and sellers have all been out in pressure. In flip, that has been underwritten by a swathe of specialists eager to hitch their proverbial waggon to the equally proverbial prepare and name time on every part that has made London a centre of economic excellence for hundreds of years.
But with early June seeing news of three new listings in London and the uncooked empirical proof underlining the truth that over quite a lot of time horizons, the FTSE-100 on a complete returns foundation doesn’t seem to grossly outperform or underperform its friends in Frankfurt or New York, it appears clear that we have to take a more in-depth have a look at this.
London has all the time been a hotbed of economic innovation and that is still true to at the present time. Challengers are eager to work inside the understandably tight technical constraints to ship game-changing propositions that aren’t all smoke and mirrors. Whilst some slip via the web – London & Capital Finance is a primary instance – the scope and scale of failures within the UK over the past decade is nothing near what we’ve seen with the likes of Wirecard (Germany) or the most recent swathe of regional banking collapses within the US.
But if innovators maintain the keys, why have we seen a UK Capital Markets Industry Taskforce established, endorsed by the federal government and populated by delegates from a number of the most staid establishments within the Square Mile? Chaired by the LSE and with luminaries together with Mark Austin of Freshfields (creator of the Austen report) plus representatives from Schroders, Barclays and GSK, this self-appointed committee has positioned itself to be the authority relating to righting the ship – a ship that will or will not be sinking, relying who you ask.
The potential conflicts of curiosity listed below are many. The LSEG holds the keys relating to the allocation of latest MTF (Multilateral Trading Facility) licenses.
The similar physique can also be on a relentless energy seize, with the principle board, AIM and now their nascent Intermittent Trading Venue venture trying to mop up as a lot of the London capital market as doable. Yet as we’ve seen explicitly with AIM, the shortage of significant competitors – Aquis could also be making inroads, however it has taken a very long time – has merely served to drive itemizing prices larger and speed up the variety of issuers deciding that remaining a part of a public market merely isn’t well worth the grief.
For London to regain misplaced floor, innovation must flourish, not be stifled by these whose agendas are dominated by self-interest. The truth this self-elected Taskforce felt they may make a distinction with none challenger FinTech’s within the pack defies perception. There’s a feint nod to innovation with the inclusion of a single personal firm on the panel, however it seems like tokenism – and the fact that the Government endorsed all this seemingly underneath a “nanny knows best” mantra is simply as unhealthy.
Top this with too many “experts” from all sides who proper now appear intent on calling the demise of capital markets within the UK and it’s no shock it seems like we’re peering into the abyss. City Grandees will all the time have a job to play, however equally they should perceive when it’s time to step apart and make approach for the brand new guard. Ultimately that is the cohort who will outline what the sq. mile seems to be like within the years to come back.
Have a tip for the key banker? Email citydesk@normal.co.uk