Interview
Julia Hoggett, CEO @ LSEG plc: The Myths and the Reality of The London Stock Exchange
- Predicts the reversal of the disconnect between society and capital markets by leveraging the UK's world-leading universities and second-largest pool of institutional capital to restore investment rates and growth.
- Outlines a plan to shift pension fund regulation from cost-based metrics to net-return-based fiduciary duties, aiming to enable greater investment in private companies and the domestic economy.
- Notes that the 11 largest defined contribution schemes have committed to investing 5% of their total assets in private companies by 2030, with an expectation that funds will consolidate to mimic Canadian or Australian models.
- Anticipates the UK capital market returning to the largest in Europe and top three globally by 2035, with the LSE positioned as the "leading international exchange" and "default choice" for significant UK companies.
- Proposes reducing or removing stamp duty by incentivizing pension investment through tax breaks, such as dividend tax credits, to generate government revenue that offsets the loss.
- Foresees a cultural and regulatory shift away from "cheap is good" and check-box compliance toward "outcomes-based regulation" that fosters innovation and values quality in financial services.
- Argues that removing CEO pay constraints is necessary to hire globally competitive talent and create "globally consequential companies" capable of competing in US and Asian markets.
- Hopes to correct the narrative of UK market inferiority by leveraging higher free-float adjusted turnover than the S&P and NASDAQ, alongside immediate indexation options like the FTSE 100.
- Warns of risks including the perception of high regulation and costs deterring developers, "perverse outcomes" in ESG regulations favoring large extractive industries, and binary societal discourse driven by algorithms.
- Expects that Brexit will drive a necessary focus on balancing the global financial center role with the domestic economy, potentially attracting European companies to London for listing.
- Envisions a "virtuous circle" where restored domestic risk capital connects companies, R&D, jobs, and pensions, while retail investors feel a stake in firms funding public services like the NHS.
- Predicts that if the "flywheel" of risk capital is engaged, the UK can maintain high liquidity and indexation access without requiring US re-domiciliation, leveraging its history as a capital convener and current fintech technology.