LSE sets out recommendations for London IPO market

The London Stock Exchange Group (LSE) has suggested ways to ensure London’s status as a centre of UK and international IPOs, with the publication of a paper exploring the health of the London IPO market.

LSE believes issuers should allow more opportunities for extended and widened engagement at pre-IPO stage including more independent pre-IPO research and when constructing its syndicate, a pre-IPO company should fulfil its needs with the smallest number of banks, adding more only when there is a specific practical reason to do so. But the exchange insisted concerns that more IPOs in London are trading below their issue price compared to other financial centres are unfounded.

The paper, entitled Leadership in a changing global economy: The future of London’s IPO market, contains an analysis of the London listing environment designed to explore the health of the London IPO market and ways it can improve.

LSE believes issuers should publish the band for banks’ fees in the prospectus and disclose the criteria which determines how the fee is awarded and that the UK government can help maintain the UK’s status as a global financial centre by reinstating the need for regulators to consider the attractiveness of the country’s capital markets when regulating the financial services industry.

“We need to ensure that the London listing market continues to flourish,” said Xavier Rolet, CEO, LSE. “As well as making strong recommendations to issuers and the wider financial community, we are also calling on the government to enable regulators to consider the UK’s competitiveness in their regulatory framework. We are also reiterating our long-standing request for the abolition of stamp duty on shares.”

Mayor of London Boris Johnson expressed his support for the recommendations in the paper, pointing to the IPO market as a key part of London’s attractiveness as a place to do business. “We should seize the opportunity to cement our reputation as the number one place to do business and I will do all I can to champion the cause,” he said.

The LSE announced a 9% rise in revenue to £328.1 million in its results for the six months ending 31 September 2011, which it attributed to greater diversification of its business, especially in post-trade income. In November, the exchange group signed a contract to provide trading technology to India’s Delhi Stock Exchange through its MillenniumIT subsidiary.