Following comments from former Shadow Chancellor Ed Balls about the need for a cultural shift in the UK’s capital markets, Alasdair Haynes, CEO of Aquis Exchange, has savaged the UK Government’s attitude to competition in the sector.
Speaking at the FIX EMEA event in London yesterday, Balls said, “The UK Government has to see our markets and trading places as national assets and work with the private companies who have stewardship over them. I think the fact that the London Stock Exchange Group (LSEG) business is doing really well as a global business, almost entirely as a data business, is a good thing. I think the London Stock Exchange really matters too, and it is important to the government’s relationship with the stock exchange is that they that talk about the importance of that trading platform here in London.”
He went on to note that any UK government had to be less risk averse when supporting capital markets culture.
Yet Haynes added that the current Chancellor of the Exchequer, Jeremy Hunt is not advocating competition in order to stimulate market growth, which is challenging the ability of UK markets to grow.
“Once again, the Chancellor talks about how to make the London Stock Exchange the ‘NASDAQ of Europe’,” says Haynes. “NASDAQ was successful because it was a challenger trying to beat an incumbent, which was the New York Stock Exchange. You can’t make the incumbent the challenger. The second issue that I have is that 96% of the London Stock Exchange Group’s revenue is driven outside of UK capital markets. Therefore, it tehe chief executive has done a fantastic job for the shareholders. Yet, they’ve done a terrible job for UK capital markets. The third issue is that the Conservative Party should be promoting competition.”
Haynes warns that for the government to promote a lone national champion in a capital market, in this case rival LSEG, when the UK’s own market is segregated from Europe and therefore from inter-European competition, is to stifle competitive pressure at home.
“Competition is here,” he says. “We have done more IPOs in the last two years than AIM, our stocks have actually outperformed AIM over the last year. We have sold our technology internationally, one to a central bank and beaten Nasdaq, the world’s leader to a sale. So there’s a British success story here. If you’re not promoting competition as a Conservative, and you actually want an effective monopoly to become the ‘NASDAQ of Europe’, then you are completely destroying what capital markets in the UK could be.”
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