Britain’s
markets watchdog is preparing to publish trading data for every London-listed
share in a bid to prove that UK equity liquidity is much stronger than many
issuers and advisers assume. The move
comes after several companies cited lower liquidity as a reason to favor a US
listing over London.
According to the Financial Times, The
Financial Conduct Authority (FCA) plans to collect and release data from all trading
venues, including exchanges, dark pools, systematic internalizes and
over-the-counter markets. Current figures focus mainly on the London Stock
Exchange’s central limit order book and miss large parts of the market.
FCA Targets Under-Reported UK Liquidity
Interim
markets director Simon Walls was quoted by the publication saying that there is an under-reporting of UK
share liquidity. He said the FCA is talking to
multiple parties about stepping to
fix the problem ahead of a full consolidated tape, which is due next year.
Between
January and September last year, official order book data captured about 270
million UK share transactions. The FCA estimates that the total notional amount
traded was roughly four times higher when all venues are included.
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Advisers say
prospective issuers still view London as less liquid than US markets. The LSE
has tried to push back with a document showing FTSE liquidity is
comparable with major US indices and noting that most UK companies that listed
in the US after raising more than 100 million dollars now trade below their
offer price.
Wider Reforms to Revive Capital Markets
The FCA has
already eased some rules to speed up equity and debt issuance, including
removing the prospectus requirement for many secondary share sales.
It is also
considering relaxing curbs on payment for order flow in certain wholesale
business, cutting reporting for some over-the-counter trades, removing position
limits in commodities, creating a framework for more tokenized assets and
trimming disclosure for securitizations.
FCA plans to
publish the interim all-venue data so that investors, bankers and boards can
use a fuller picture of trading when they assess London’s appeal as a listing
venue.
Expect ongoing updates as this story evolves.
This article was written by Jared Kirui at www.financemagnates.com.
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