A Guide to Capital Market-London Stock Exchanges

London Stock Exchanges

London Stock exchange is home to some of the world’s largest and most well-known companies. The London Stock exchange has a history of making the fortunes of some of the most successful corporations in the world. It has played a critical role in making London the well-known financial hub of the international community and an ideal place for corporates to raise investment and augment their corporate profile. Centralised location, world class standards of corporate governance and sufficient capital flow are the major contributing factors to making this stock exchange a favoured destination for companies and investors from all over the world.

The World’s Capital Market

The London Stock Exchange is a globally renowned stock exchange with a glorious history spanning more than 300 years. With a globally accepted and respected regulation and corporate governance, the exchange offers excellent choices in both range of markets available and the ways and means of accessing those markets. This makes it highly suitable for organizations at each stage of their lifecycle.

The 2007 Global Financial Centres Index ranks London ahead of New York as the world’s leading financial centre. With a well-established network of expert financial advisors, added level of flexibility, support for multi-asset, multi-currency and multi-jurisdictional trading, solid infrastructure, ease of access and top class business environment, the London Stock exchange continues to a play a stellar role in making London a reputable financial hub of international recognition. The exchange’s ability to successfully meet the varied needs of companies and investors makes it one of the most reputable and successful stock exchanges in the world, attracting companies from around the world. London stock exchange continues to be the favoured destination for Initial Public Offerings (IPOs) and the capital raised by companies through the exchange continues to show stellar growth year after year.

Today there are more than 3200 companies listed on the London Stock Exchange with close to 700 of them being foreign companies from 70 different countries. The total value of capital trading on the stock exchange exceeds £5 trillion. London’s stellar reputation as a global financial hub of eminence together with the Exchange’s markets at its heart is a powerful factor that attracts companies from across the globe.

Benefits of joining the capital market of the UK

By accessing one of the Exchange’s markets, companies find themselves in a uniquely advantageous position to raise funds which could be hard to replicate elsewhere. Joining a capital market is the only way companies can raise healthy initial as well as ongoing capital. Trading on a well-known stock exchange also raises your profile and adds to your reputation which in turns vastly improves your liquidity position. All these factors play a significant role in helping your organization achieve strategic goals and objectives of your company.

It is a known fact that as organizations grow and expand into new markets and acquire new customers, other known source of capitals such as bank loans and investment from venture capitalists fail to match their growing requirement for capital. Raising capital through capital markets in London can equip businesses with the capability to fund expansion in existing or new markets and invest in growth opportunities which could range from acquisitions to investing in research and development to launch new and innovative products in the marketplace. To keep the wheels of your company well-oiled, it is imperative that you have access to a deep capital pool and a large and myriad investor base. It ensures that the company has easy access to a reliable and sizeable source of capital funding. And when it comes to London capital markets, it is second to none with a pool of capital large enough to meet the financial needs and requirement of thousands of companies ranging from small organizations to some of the largest in the world.

Augment your prestige and profile

Being accepted by London capital market is going to provide a solid thrust to the overall prestige and profile of your company. It will boost awareness about your business and lend credence in the eyes of your shareholders, customers, suppliers and investors. The prestige acquired by being traded on a venerated stock exchange opens new doors of opportunities for your company as it can tremendously help you in your future expansion and growth. It greatly boosts your liquidity position which allows you to use your stock as a powerful currency while planning your future growth and expansion.

Access to huge information base

The Exchange disburses information which carries tremendous weight with it as it is some of the most widely followed and analysed company information across the globe. The information distributed by the exchange is closely followed by fund managers, institutional investors, capital market professionals, economists, government and the media.

Trading platform

The Exchange provides a highly active and efficient secondary market platform to facilitate trading in a wide array of UK and international securities in addition to exchange traded funds, depository receipts, fixed interest and covered warrants. The speed, efficiency and sophistication of the Exchange also boosts liquidity as it facilitates more active trading in securities. This has a cascading effect as it generates or attracts more investment capital.

Of course all this is not possible without sophisticated technology. The Exchange also invests heavily in technology to ensure that its trading platform remains up to date, robust and efficient to facilitate hassle free trading.

Domestic trading services

The Exchange’s domestic trading services are:

• SETS – the electronic order book for the most liquid securities
• SETSqx – this is a platform designed for trading of less liquid securities.
• SETSmm – It is a hybrid trading service for mid-cap securities. It comprises of an order book with integrated market maker liquidity

International trading services

The Exchange’s international trading services are:

1. International Order Book (IOB) – electronic order book meant for depositary receipts trading
2. International Bulletin Board – platform for trading of international equity securities
3. International Retail Service – platform for UK-based private investors carry out trading of international stocks in pound sterling.

About the author

Sumit Agarwal
Sumit Agarwal (ACMA ACA India), the Managing partner of dns accountants is a highly respected accountant with expertise in helping owner-managed businesses.