London Stock Exchange owner optimistic about listings revival

UK companies need to pay their executives more to compete with US businesses, said the head of the London Stock Exchange Group whose own package is set to increase by 76 per cent.

Speaking on the day LSEG published earnings, David Schwimmer, a New York native, said that on pay the US was “in a different place” compared with other countries.

“That is an issue that companies that are competing on a global basis from a base in London need to take into account,” the former Goldman Sachs banker said. “If London has an ambition to be a globally leading financial centre and to attract world class companies, that means it has to attract world class talent.”

LSEG is canvassing shareholders to approve an £11mn pay deal for Schwimmer, which is about 76 per cent higher than his current package.

The exchange and data group has benchmarked his proposed salary and bonus package to major US data groups such as index provider S&P Global and research company Moody’s, rather than UK businesses, the Financial Times previously reported, reflecting LSEG’s transformation into a global financial data group.

Schwimmer’s comments echo the view of Julia Hoggett, the head of the exchange, who last year said UK executives should be paid more to retain talent and prevent British companies moving their listings abroad.

Schwimmer has led the company since 2018, after a 20-year stint at Goldman Sachs. He said LSEG has to provide competitive offers to employees in light of rival companies, “a number of which are based in the US”. He declined to comment on his own pay deal.

The executive spoke as LSEG reported revenues of £8bn in 2023, a rise of 7.8 per cent compared with the previous year. Revenues from IPO and equity market trading fell 8.8 per cent year on year in 2023 to £227mn, reflecting the subdued listings environment.

LSEG’s stock market revenues fell to the level of 2020, when companies ditched their listings during the outbreak of the coronavirus pandemic.

A number of companies have recently switched their existing UK listings in favour of rival exchanges in New York and Frankfurt, citing a big decline in liquidity on UK equity markets and the potential for higher valuations in the US.

However, fast-fashion retailer Shein is considering London as a back-up option for a listing this year if it fails to float in New York over its ties to China.

The average daily value of stocks traded on the exchange sank 20 per cent to £3.7bn last year, further underlining the declining appetite for UK-listed companies. LSEG is working with the UK’s financial regulator to improve the attraction of the London stock market, including by seeking to overhaul listings categories.

“All of that is helpful,” Schwimmer said, adding that the main driver of trading volumes is the macroeconomic environment and concerns around rising geopolitical tensions.

Schwimmer was upbeat about upcoming London listings, saying “we are seeing more activity, more preparation than we have seen in a number of years in terms of the IPO pipeline”.

Equity market activity accounted for just 2.8 per cent of revenues last year, with data and analytics bringing in the most money at two-thirds of revenues.

Operating profits at LSEG fell 3.2 per cent year on year to £1.4bn, in line with analysts’ expectations, but sent its shares down 2.4 per cent in early trading. Ben Bathurst, analyst at RBC Capital markets, said the company presented “a healthy ongoing revenue development picture”.

Rising interest rates helped push revenues at the company’s post-trade and clearing businesses up 19 per cent as traders sought to manage “uncertainty around the timing and scale of central bank interest rate moves”, LSEG said.

The company itself benefited from higher interest rates, earning £289mn on net Treasury income, up 13 per cent compared with the previous year.