Rebalancing the Economy: Trade and Investment

Written evidence from the London Stock Exchange Group

Role of the London Stock Exchange in UK trade and investment

1. Introduction

The London Stock Exchange Group welcomes the focus that the Business Innovation and

Skills Select Committee is giving to the UK’s policy and actions on international trade and

investment.

Through its international business development activity, the London Stock Exchange Group

has been extremely successful in attracting international companies to the UK to raise capital through our markets. We also provide UK businesses, both large and small, with a globally recognised platform - making them visible to investors all over the world. To continue to do this and maintain the global economic competitiveness of London’s markets, it is essential that the UK both maintains and strengthens its focus on international trade and investment, especially as the balance of global economic power shifts away from traditional Western economic sand towards the emerging economies.

This briefing includes a short update on the Exchange’s international trade activity- our

primary markets and technology business development.

2. Key Exchange messages on UK trade and investment

• The Exchange is a world champion in international listings, with major positive

knock on effects for UK financial services and London’s status as a global

financial centre . We are the number one market globally for international listings - we

want to maintain this and to work with the Government to attract more international

companies to London. The Exchange now has 592 foreign firms from nearly 70

countries - more international firms than any other major Exchange (there are 501 on the

NYSE (US) and 74 on Deutsche Borse). It is vital to London’s sustainability as a financial

centre that it remains open and welcoming to international companies and capital.

• A listing on our markets enables UK business, both large and small to benefit

from the most international pool of capital in the world. In 2009, UK-incorporated

companies listed on our growth market AIM supported the jobs of 570,000 jobs and

directly contributed £12 billion in GDP to the UK economy. A listing on AIM gives

companies an international platform, making them visible to investors all over the world.

There are many case studies we can share of UK AIM companies who have directly

benefited from international investment through AIM.

• We are very active in promoting London as a capital raising venue in Russia,

China, India and Latin America . We would be happy to share examples of successful

UK trade engagement with these countries and our experiences of engaging with

companies in these countries. It is vital that UK Government departments are joined up

in their approach to trade issues, as there have been occasions when a lack of such an

approach has directly hindered vital trade relations.

• The London Stock Exchange Group has a strong history in building strong

partnerships with capital markets providers around the world including the

Johannesburg Stock Exchange, Tokyo Stock Exchange with Tokyo AIM and the Oslo

Bourse. In the long term, our goal is mutual development of global capital markets.

3. Exchange key international business information

3.1 Primary markets

Below is a summary of our priority countries for primary markets in 2011:

• India - we have seen significant issuance from this region and continue to promote the

exchange there. We also cooperate with the local exchange through a MoU arrangement.

Recent listings include: Essar Energy (India, May 2010) raised £1.3 billion though its

premium listing, and was the largest ever Indian IPO in London and the second largest

Indian IPO on a public market anywhere in the world. Five Indian companies have joined

AIM in ten weeks, raising an estimated $344.4 million: Jubilant Energy raises $85

million in the third largest IPO on AIM this year, $2.3 billion raised by Indian firms in

London in 2010, 28 Indian firms on AIM.

• China - We have established a close cooperation with the HMT and are further

strengthening collaboration with the local regulators. In conjunction with the FSA we

devised two new products to further facilitate capital raising in London by Chinese issuers.

• Latin America and Africa. We are seeing a strong potential from the region and will

continue to re-enforce our presence there.

Recent listings include: African Barrick Gold (Tanzania, March 2010). £581 million at

admission.

• Russia and CIS. This is a region from which we already have more issuers than any

other exchange in the world. We are closely cooperating with the local exchanges and

monitoring any regulatory developments that may affect the issuers from that region.

Recent listings include: Avangard (Ukraine, May 2010). $187.5 million at admission.

• Mongolia. We are participating on a tender to provide further help to the local exchange

and the government privatisation plans.

3.2 MillenniumIT- Capital Markets Technology partnerships

The Exchange is working across the world to develop partnerships with capital markets

operators in emerging economies. Technology advances are supporting greater global

cooperation. Our acquisition of the Sri Lankan technology company MillenniumIT is an

example of this. Through the Exchange, MillenniumIT is now providing trading platforms

globally and their technology is used by markets in Croatia, Kenya, India, Sri Lanka as well

as the London Metal Exchange and ICAP.

Our international partnerships work in a number of ways – trading, information, technology.

For example:

1. We have a market surveillance system and business partnership with Egypt.

2. Johannesburg - trading system and business partnership.

3. Norway - trading system and business partnership.

January 2011