How kind of Ed Balls to take time out from breakfast TV and being a celebrity to tell David Schwimmer and the London Stock Exchange Group how to run their enterprise.
Balls’s suggestion that somehow the London stock market could fly again as a separate entity shows naivety and a touch of hypocrisy.
Among the reasons why the stock exchange has fallen into disrepair is the decision by New Labour – yes, and Ed Balls – way back in 1997 to remove dividend tax privileges from UK pension funds.
So kind: How kind of Ed Balls to take time out from breakfast TV to tell David Schwimmer and the London Stock Exchange Group how to run their enterprise
The decision sparked the exit of a wall of investment money from London to overseas markets, and encouraged foreign activists and hedge funds to secure dominant positions on UK share registers from which to launch opportunistic takeovers.
The reality is that, cut off from its LSEG parent, the London exchange, which traces its roots back to 17th Century coffee houses, would be a sitting duck and fall under overseas control.
Over the past two decades successive chief executives have courageously seen off a series of would-be suitors who recognise that a foothold in the City of London, where the world’s top wholesale derivatives and currency markets sit, would provide prestige and a platform for expansion.
The idea that somehow the current bosses of the London market have been neglectful is off the mark.
The LSEG has campaigned relentlessly against tight and uncompetitive regulation, imposed by the Financial Conduct Authority, and self-appointed governance ‘experts’ in asset management.
Campaigning: The LSEG has campaigned relentlessly against tight and uncompetitive regulation
It is a supreme irony that pension fund chiefs demand higher standards of governance in the UK while investing in markets such as New York’s Nasdaq, where requirements are pitifully lax.
The LSEG’s purchase of data powerhouse Refinitiv for £21billion in 2021 was a transformative deal. But it also widened the market presence of London by bringing to the party fixed interest and currency trading facilities.
The London market’s expansion into trading indexes and data has proved pioneering and has allowed clients to take full advantage of algorithmic-driven transactions.
The New York Stock Exchange (part of the International Continental Exchange) also has taken the data route.
The LSEG’s former pursuer Deutsche Boerse recently bought the Danish investment management software outfit SimCorp. The Hong Kong market diversified into commodities through its purchase of the London Metal Exchange.
Euronext, in Paris and Amsterdam, is also trying to bolster its operations, most recently with a £5billion bid for Spain’s Allfunds platform, albeit that the bid failed.
Certainly, the LSEG needs to be more aggressive in pursuing initial public offerings and to end a leakage of listed firms to the US.
But selling off London’s exchange, home to a vast array of FTSE and Aim indexes, would enfeeble rather than strengthen its reach.
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