Xavier Rolet: Why the London Stock Exchange needs to be international


The CEO of London Stock Exchange Group joins the debate on international companies joining London’s markets

There has been much debate recently around the numbers of international companies choosing to list their shares in London. Some have argued that this could be damaging for UK companies and investors.

Yet London has for hundreds of years been the world’s capital market, welcoming businesses from all over the globe to its well-regulated, efficient, trusted and investor-friendly markets.

London was founded on its capacity to embrace innovation, diversity and commerce.

It is essential for the UK’s future prosperity that London continues to attract international business, to list, trade and operate in this great City.

London’s structural advantages are well understood and enviable: London’s markets operate in a time zone which enables simultaneous trade between East and West, in English, London has a language which is considered to be the business language of the world while it also acts as a gateway into the European economy.

“The very first shares issued were from a British company, looking out, seeking to build trade routes with China”

It is precisely because of the way that London has developed that enables it to thrive – providing leadership in a fast evolving global economy.

London’s openness and its unique ability to foster relationships with new international partners is one of its enduring strengths.

This internationalism attracts talent, skills, expertise, funds and business to our shores.

It creates jobs.

It provides a competitive edge, never more needed than now as we grapple with the challenges of recovery from the economic crisis.

Today, London continues to offer investors access to an unparallelled pool of international capital; business, broad and deep advisory expertise; and corporates, a listing venue with visibility alongside global peers and a track record of support that is unsurpassed.

From its humble origins in a coffee house, to its role within a leading global exchange group, London Stock Exchange has always welcomed business and investors from the UK and around the world. In fact, the very first shares issued in London were from a British company, looking out, seeking to build trade routes with China.

Today, London Stock Exchange remains the world’s most international exchange with almost 3,000 companies from over 110 countries listed and traded on its markets. For companies seeking to raise capital, London continues to be the premier destination for ambitious businesses from the UK and around the world.

“The health of London’s IPO market has a direct impact on the UK’s economy: a more efficient capital raising ecosystem gives UK businesses cheaper access to finance, helping them fuel their growth ambitions”

Total IPO money raised on London’s markets during the last calendar year was over £12.9bn, a 27 per cent increase on 2010. This figure, along with the £9.2bn raised in further issues during 2011, shows that investor appetite is strong.

The pipeline of companies planning to list in London over the coming months and years remains strong, particularly from the UK and emerging, high growth international markets.

The health of London’s IPO market has a direct and positive impact on the UK’s economy: a more efficient capital raising ecosystem gives UK businesses cheaper and better access to finance, helping them fuel their growth ambitions. A deep and extensive pool of financial and business expertise drives innovation and jobs; and increased tax revenues flow into the UK’s finances.

For the London listing market to continue to flourish, there must be a regulatory system in place that considers London’s continued attractiveness as a financial centre. There does not need to be a trade-off between strong regulation and competitiveness.

Indeed, strong regulation provides companies looking to list with confidence and stability.

“As a pivotal part of the UK’s financial community, the LSE takes its responsibility for nurturing the growth of SMEs very seriously”  

However, we believe that regulators must be able to take the UK’s ability to compete internationally into account when developing regulation.

To this end, London Stock Exchange Group has recently been working hard to encourage the UK government to reinstate the requirement for financial services regulators to consider the UK’s competitiveness into the new Financial Services Bill.

That said, it would be wrong to believe that the LSE is only interested in attracting international companies to list on our markets in London.

Behind  the noise surrounding the listings of large, global organisations is the fact that small and medium-sized enterprises, SMEs, form a core and vital part of our customer base. As a pivotal part of the UK’s financial community, London Stock Exchange takes its responsibility for nurturing the growth of these companies, some of which will become the corporate giants of tomorrow, very seriously.  

AIM, our dedicated growth market which was founded in 1997, has been a fantastic source of new and on-going capital for ambitious companies. According to a recent Grant Thornton study, UK AIM companies contributed £12 billion to UK GDP, supporting 250,000 jobs. Critically, AIM is also one of the few growth markets in the world where there is both deep institutional and retail investment support.

London’s role in the global business community is unique. The UK cannot, and should not, be isolated from the global economy. Our future economic success, our ability to drive innovation, create jobs and succeed on the world stage, is enshrined in our ability to embrace our strengths. And our key strength, more relevant today than perhaps ever before, is our ability to look outwards.

May London long remain a home-from-home for international business.

Xavier Rolet is the chief executive of the London Stock Exchange Group. Previously he was a senior executive at Lehman Brothers and, most recently, CEO of Lehman in France. Before Lehman Brothers, he held senior positions at Dresdner Kleinwort Benson, Credit Suisse First Boston and Goldman Sachs.

Read Xavier’s last column: End the discrimination on equity funding for small firms