A street cleaning operative walks past the London Stock Exchange Group building in the City of London financial district, whilst British stocks tumble as investors fear that the coronavirus outbreak could stall the global economy, in London, Britain, March 9, 2020. REUTERS/Toby Melville Acquire Licensing Rights
LONDON, Nov 17 (Reuters) – London Stock Exchange Group CEO David Schwimmer called on Friday for progress in British efforts to shift pension pot investments towards companies, which he said would boost the country’s stock market in just a few years.
Britain’s finance minister Jeremy Hunt is next week due to set out further measures to channel pension money into British growth companies, building on his “Mansion House Compact” which has been welcomed but accompanied by calls for faster action.
Under its planned reforms, 10 firms have pledged to invest 5% of their pension pots into unlisted companies by 2030, a total of about 50 billion pounds ($62 billion), and help build a bigger pipeline of potential listings.
“If there’s capital that starts to be allocated more to UK companies, I think you’ll start to see the benefits of that in relatively short order, over the next year or two or three,” Schwimmer told reporters on the sidelines of an LSEG event.
It was important to start making progress in reversing the 20-year journey by pension funds from stocks to bonds, he added.
Brexit, which largely cut the City of London off from the European Union, and British companies such as chip designer Arm choosing to list in New York, triggered worries that the financial centre was losing its edge in global listings.
The EU is also passing a law to force banks to shift euro derivatives clearing from LSEG to the bloc, although Schwimmer said this has had little impact so far.
“The interaction that we have with firms is that they are very comfortable continuing to clear in London,” he said, adding that he was “optimistic and hopeful” this would continue.
Schwimmer said it was a “myth” that valuations in New York were better. “There is an opportunity for Arm to list in London,” he added.
Regulators and market participants have criticised the sometimes downbeat narrative about London.
Schwimmer said there has been no criticism of the U.S. market even though Arm shares have been trading below their IPO price. “I would just ask the question, if that happened here, what do you think the commentary would have been here?”
LSEG earlier announced higher growth targets at its Capital Markets event as it pushes deeper into data in a deal with Microsoft, building on its $27 billion takeover of data company Refinitiv in 2021.
This, Schwimmer said, does not mean that LSEG was “de-emphasising” the 300-year old London Stock Exchange side of the company as equities makes up only 3% of group revenue.
But it was “early days” in educating markets and regulators to fully understand the new breadth of LSEG operations, he said.
Thomson Reuters, parent of Reuters News, holds a minority stake in LSEG, which pays Reuters for its news service.
($1 = 0.8051 pounds)
Reporting by Huw Jones; Editing by Jason Neely and Alexander Smith
Our Standards: The Thomson Reuters Trust Principles.
