LSE deputy CEO says capital is key to reviving London's public markets

London records 7 listings and 15 de-listings so far this year

Only seven companies have listed in London so far this year, a number dwarfed by the 15 that have de-listed, according to The Wall Street Journal.

Charlie Walker, the exchange’s deputy chief executive, said capital access — not more rule changes — is what London’s market needs. Better access to capital is key to the exchange reestablishing its reputation as a world leader, Walker said in an interview. A collective effort across regulators, government and U.K. companies is working to revive London’s fortunes, he said, but capital is the missing piece.

“We’ve got this sort of mechanically sound car now, and we just need some petrol, and the petrol is capital,” Walker said.

Two decades ago, U.S. policymakers fretted that London would eclipse Wall Street as the world’s primary listing destination. Major U.K. companies are now moving their primary listings to the U.S., or deciding not to list in London in the first place.

Chip company Arm, gambling group Flutter and fintech Wise are among a litany of U.K. companies that ditched their home market for New York in recent years. “We should be fighting tooth and nail to retain all of our companies,” Walker said.

Last week, the Financial Times reported that drug maker AstraZeneca — the second most valuable company in the U.K. — was weighing a merger with a U.S. rival, setting off a wave of speculation that London was on the edge of losing another mega-cap company to the U.S. Neither company has commented on the report.

In recent years, the LSE, alongside the U.K.’s finance and markets regulators, has ushered in a suite of rule changes in an effort to turn the bourse around. Reforms made over the last two years mean that companies listing in London can offer fewer shares for sale, spend less on distributing company information to analysts, and face fewer hurdles in acquiring other companies. Last month, the LSE said it would introduce 24-hour trading for exchange-traded products in its latest bid to increase liquidity in London markets. The measures are aimed at making both listing and staying listed in London cheaper and less onerous.

“Any levers that we can pull, you can assume we’re pulling them,” Walker said.

Walker said regulation rarely comes up now in companies’ decisions about where to list. “Regulation very rarely now comes up in the conversations we’re having with companies about whether or not they want to come to the U.K. or go to any other market,” Walker said.

To solve the problem of sparse liquidity, the LSE needs the help of a broader cultural shift in the U.K., Walker said. This could include cutting taxes on investors’ gains on U.K. stocks, or diverting more of the U.K.’s mammoth personal savings toward domestic stocks, he said. “This is something the LSE cannot do on its own,” Walker said. The shallow pool of investor cash available for London-listed companies “is more of a long-term thing for the U.K.”

If London does not right its faltering public markets, the consequences are existential — a reality that should spur regulators and the government to further reform, Walker said. “If the U.K. gets to a point where it can’t be home to globally consequential companies and they have no choice but to go overseas, that’s really not a good place for the U.K. as a whole.”