The London Stock exchange counters us listing myths to attract companies

The London Stock Exchange (LSE) has intensified its efforts to persuade companies to choose London for their stock market listings over New York. In a newly released analysis titled “Mythbusting — UK vs US,” the LSE details the drawbacks of selecting the American market, including higher fees and greater chances of facing litigation.

The analysis highlights the risks posed to directors operating under the Sarbanes-Oxley rules in America, which could result in personal liability for accounting missteps. By choosing London, the LSE argues, companies not only benefit from reduced listing fees but also enjoy access to a broader and more diverse pool of investors compared to the US market.

While the US listing process has often been perceived as more lucrative, the LSE report presents data suggesting otherwise. For instance, of twenty companies that have raised over $100 million through US listings since 2014, the majority have performed poorly. Only four remain profitable, with nine delisted and seven suffering significant value decline since floating.

The report also questions the supposed advantages of obtaining inclusion in American indices such as the S&P 500. LSE officials point out that inclusion in London’s FTSE indices is often more attainable while providing comparable liquidity. Additionally, the advisory fees tied to a UK listing are approximately half the cost of those in New York, emphasising the cost savings available to companies choosing London.

Arm Holdings, a British technology firm that floated on Nasdaq in 2023, is cited in the report as a rare success story among UK companies listing in the US. The company saw its market valuation rise by 158 per cent, reaching £90 billion. However, the LSE argues that such cases are exceptions, noting broader underperformance trends among companies switching to or initially listing in the US.

The report also critiques assumptions that US-based firms receive a valuation premium over their UK-listed counterparts. Analysis of companies such as Flutter, CRH, and Ferguson, which have moved their listings to New York, reveals that valuation movements are generally in line with industry trends rather than the new listing location.

As pressure on UK firms to list overseas continues, including from activist investors, the LSE’s campaign looks to address both company boards and markets sceptical of London’s appeal. With major potential listings such as Shein on the horizon, this drive could prove crucial to reversing recent declines in the number of companies floating in London.