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London Stock Exchange’s mid-life crisis

The LSE’s Refinitiv purchase is a sign of a venerable institution suffering an identity crisis
London Stock Exchange’s mid-life crisis

Some organisations need to do nothing more in life than merely exist. Take London Stock Exchange (LSEG), which sits between buyers and sellers of securities, taking a small cut for the privilege. Yet if the LSE didn't exist, it is debatable whether it would still need to be invented. After more than 200 years of fulfilling that market-matching function, or something very similar, it seems this is no longer enough to compete in the modern world. 

IC TIP: Sell at 8,054p
Tip style
Sell
Risk rating
High
Timescale
Medium Term
Bull points
  • Costs could fall faster than expected 
  • Near-monopoly data source
Bear points
  • Balance sheet assumes huge write-down risks
  • Cost savings too expensive to deliver
  • Initial Refinitiv euphoria has worn off
  • Management has a lot to improve in a short time 

As this magazine has chronicled, companies are increasingly finding alternative ways of raising money – via venture capital funds, private equity investors or even direct-to-consumer crowdfunding initiatives. The result is that the number of listed companies raising money via a stock market listing has declined steadily in a surprisingly short space of time. According to Statista, in little over half a decade the number of companies listed on the LSE, including the junior market, has fallen from 2,429, to 2,010 as of July, with the recent surge in fintech-led IPOs something of an upward blip in an otherwise downward curve.

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