LSE: maintaining the attractiveness of the London Stock Exchange thanks to SPACs

  •   01/02/2021 - 08h22
  •   DEHOUI Lionel

After the United Kingdom's departure from the European Union, London still wants to stay the course on the global stock market. As part of this, LSE is considering the use of SPACs, which may help to maintain the attractiveness of the London Stock Exchange. Also, further changes are expected on the London stock market with the ongoing review of the listing rules in Great Britain.

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LSE: maintaining the attractiveness of the London Stock Exchange thanks to SPACs
Image copyright: Shinya Suzuki - Flickr

Great Britain wants to strengthen the attractiveness of the London Stock Exchange

Britain is considering making the London Stock Exchange more attractive. To achieve this, it is counting on the use of SPAC. This is what emerges from the recent statement made by David Schwimmer, the managing director of the London Stock Exchange (LSE). This will allow the London Stock Exchange to transform itself into a truly global financial centre after Brexit, he says.

On Friday, January 29, 2021, the London Stock Exchange operator completed the acquisition of the financial data and analysis company Refinitiv. The amount of the transaction is valued at 27 billion dollars (22.23 billion euros). Following completion of the acquisition, LSE is now expected to play a major role in the important UK financial services sector.

Indeed, the operator is expected to deploy the necessary means to help maintain the LSE's competitiveness on the world stock market after the UK's departure from the European Union. Moreover, the City of London will have to face increasing competition from Amsterdam, where the majority of euro-denominated share trading was transferred on 4 January.


Stock markets increasingly interested in SPACs

The use of SPACs (Special Purpose Acquisition Companies) has become the trend on the stock markets for some time now in order to maintain their attractiveness. In reality, a SPAC refers to a company that has no operational activity and whose shares are issued on the stock market for a limited period of time. This, with the aim of making one or more acquisitions in a particular sector.

Moreover, SPACs have clearly taken off on the American markets. They became the most popular investment vehicle on Wall Street last year. Seeing more in London is of great curiosity and interest, said David Schwimmer. Also, the Paris and Stockholm stock exchanges are showing increasing interest in SPACs.

Last year, telecom entrepreneur Xavier Niel and banker Matthieu Pigasse, together with distributor Moez-Alexandre Zouari, launched a second SPAC in France. The purpose of this new SPAC is to promote acquisitions in the production and distribution of consumer durables.

As a reminder, Xavier Niel and Matthieu Pigasse were behind the launch of the first French SPAC in 2016 in the audiovisual sector, which has since become the Mediawan group.


Listing rules are currently being revised in Great Britain

The British government supports the (ongoing) draft revision of the listing rules in Great Britain. The review should result in a series of recommendations next month. These should enable London to better compete with New York by attracting technology companies.

Asked by Reuters to comment on the subject, David Schwimmer said that making certain changes will make the listing regime more attractive, while maintaining high standards of corporate governance. He also said he is confident that London will continue to maintain its status as the world's financial capital.