- Ed Balls has called for a break-up of the London Stock Exchange Group
Christmas at the London Stock Exchange for many years was the season of takeover bids.
Dame Clara Furse, who was in charge of the LSE in the noughties, fended off five predators in eight years. Much of her battling interrupted what should have been her festive holidays.
There is no bid this Christmas, but if heed is paid to former Labour Shadow Chancellor Ed Balls there might be one soon.
Plans: Ed Balls has called for a break-up of the London Stock Exchange Group
He has called for a break-up of the London Stock Exchange Group – the company behind the world’s oldest bourse – a move that could open the door for another takeover tilt by a rival such as Germany’s Deutsche Boerse or Nasdaq of the US.
Balls, who was a political heavyweight under Gordon Brown, has since become better known for his appearances on Strictly Come Dancing.
In his podcast Political Currency he launched a scathing attack on the London Stock Exchange Group, telling listeners the company is not fit for purpose after turning itself into a data business.
He said the exchange part of the operation has become a neglected sideshow compared with the much bigger data division. As a result, he argued, it was harder to attract new companies to the UK stock market.
Balls said: ‘Less than 4 per cent of the revenues from the London Stock Exchange Group come from listing and trading cash equities in London.
‘It has fundamentally changed from being a business that runs a stock exchange to an international data analytics company trading all over the world in a whole different speciality.
‘Two thirds of their revenue comes from data analytics. The question is are they the right people to be running the London Stock Exchange?’
A break-up would see the exchange part of the business split out of the group and become a standalone entity. As such, it would be a tempting morsel for a bidder.
The comments are a hammer blow for the London Stock Exchange Group which has come under fire this year after a slew of household name firms decided to move to New York.
The most high profile loss was Arm which floated on Nasdaq despite having been listed in London as recently as 2016.
Podcast: In his podcast Political Currency, Balls launched a scathing attack on the London Stock Exchange Group
The decision has heaped pressure on group chief executive David Schwimmer and exchange boss Julia Hoggett who despite planned tweaks to listing rules have so far failed to turn the situation around.
Before Margaret Thatcher’s day, the London Stock Exchange was a backwater for a handful of sleepy industrial giants and ex-public schoolboy money managers.
Then in 1986 came the reforms known as Big Bang, which opened the door to foreign capital and investment banks.
This transformed London into a global financial centre. In recent years the London Stock Exchange Group has snapped up data businesses, including Reuters’ Refinitiv arm, which was bought for £21 billion in 2021.
The acquisitions have partly been a reaction to three takeover attempts from Deutsche Boerse – the most recent of which was tabled in 2016, but blocked by European regulators in the following year.
Balls added: ‘If I was Jeremy Hunt I would be asking myself do we now have owners of the London Stock Exchange who are a global business but have actually decided the stock exchange itself is not really a priority for them and is only a tiny part of their business.
‘It matters that people want to list on the London Stock Exchange and you want an owner that thinks it is a central part of their business.
‘I think other stock exchanges around the world have owners that make it their priority. Our problem is it is no longer a priority for the London Stock Exchange Group.’
Other companies to have listed or launched a secondary listing in New York this year include CRH, Ferguson and Flutter.
Two weeks ago, commodity trading house Marex announced it would list in the US. Investors in Pearson have called on the education giant to do the same.
The performance of the London Stock Exchange is in stark contrast to New York’s bourses whose marketing teams have been persuading some of Britain’s finest companies to come to the Big Apple.
Senior executives including Karen Snow, global head of listings at Nasdaq, and Cassandra Seier, head of capital markets at the New York Stock Exchange, are said to be a constant presence in London. Their hard work has clearly paid off. An LSEG spokesman said: ‘London Stock Exchange is an important part of the group and it is wrong to suggest otherwise.’
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