David Schwimmer, CEO of the London Stock Exchange Group, today responded to critics who were slamming the City, claiming that it will continue to hold off competitors and maintain its position as the leading financial hub in Europe.
Banks and brokers are suffering from a lack of business as a result of the FTSE 100’s drifting and the recent lack of fresh flotations (ARM recently decided to list in fresh York in quest of better valuations).
The LSEG is also under fire for a new Intermittent Trading Venue (ITV) that detractors maintain stifles innovation and strengthens the monopoly position of the incumbent.
Schwimmer notes that London is still the most active city in Europe, having raised 75% more money this year alone than Amsterdam, which is its closest competitor.
Additionally, UK businesses that list in the US typically underperform, with Manchester United being a rare exception.
In ways that “have the potential to supercharge the scaling of our venture financing ecosystem,” according to Schwimmer, the ITV will increase liquidity for smaller businesses by presenting them to new shareholders before they are completely prepared to join public markets.
The City always manages to remake itself.
Over many years, it has done so, he said.
He denied the idea that companies would have to have a minimum market value of £50 million in order to participate in the ITV and insisted that AIM would not be eliminated.
“AIM is the most prosperous growth market in Europe and a vital component of the UK’s financial infrastructure,” he declared.
Over 4000 businesses have used AIM since it was established nearly 30 years ago to raise about £135 billion and advance in their expansion plans.
A sizable pipeline of international businesses interested in entering the sector is still present.
Schwimmer, an ex-Goldman Sachs executive who has been CEO since August 2018, adds that, while sensible, the emphasis on stock markets is exaggerated given that less than 1% of companies are listed.
He observes that Covid has made significant inroads into the insurance, currency trading, financial consulting, clearing, and legal services industries.
The future for the Square Mile appears as promising as he can recall, with the government and authorities looking for ways to support small businesses and inspire pension funds to be more daring.
Even though losing out on the ARM transaction is clearly a setback, there are valid reasons why the critical writing about London sounds overdone, according to Russ Mould of AJ Bell.
Still, London has a lot to offer. It offers a great financial ecosystem of brokers, banks, advisers, attorneys, and advisers, a mercantilist culture, an independent central bank, a floating, fungible, and inexpensive currency.
The CEO claims that Microsoft’s earlier year 4% investment in the LSEG group is proof of its appeal to the tech industry.