Should London care if listings dwindle?
The London listing review, out this week, has been hailed as a vital chance for the City to straighten its slipping crown as Europe’s top financial centre.
Amsterdam has already overtaken it in equity trading and trendy Spac IPOs.
Jonathan Hill, the former EU commissioner who led the review, has proposed loosening rules on dual-class shares and minimum free floats to attract more high tech flotations.
The big investment banks and institutions in London are cheering. But why do they care?
Share investing is global now. Not just big fund managers can invest in equities globally — even Joe Public can, at the swipe of a smartphone. The age of Zoom calls has made physical location even less important.
Many of the old arguments for London’s pre-eminence — its critical mass of skilled staff, English law and unrivalled mound of capital — look stodgy and tired. If these claims were true, why would London be so keen to weaken one of its real USPs — corporate governance?
Investors and bankers cheer for London partly for the unchivalrous cause of internal competition. They don’t want to lose business to their own colleagues in New York or Hong Kong.
For companies it makes little difference where they list. Allegro, the Polish e-commerce group, completed its acclaimed $2.8bn IPO last year on the Warsaw Stock Exchange. Funds from all over the world piled in.
Even London as a city does not make much money directly from listings. In two ways it does matter, however. The first is prestige — a nebulous, but very important commodity.
The second is UK savers, who often want locally listed, sterling shares, as tracked by the FTSE indices. If this pool becomes smaller, less dynamic and less international, they will have to make more effort and take more risk.