London Stock Exchange chief takes aim at ‘pernicious’ stamp duty on shares

The boss of the London Stock Exchange described the effect of a stamp duty on shares as “pernicious” today as she claimed the gloomy “public narrative” surrounding the City was beginning to lift.

Speaking at the City Week Forum this morning, Julia Hoggett launched another attack on the media over its coverage of a listings drought in London and said the narrative had overplayed the scale of the crisis facing London’s public markets.

“We’ve taken a much more confident position over the last several years in seeking to address some of the misconceptions that exist in the public narrative, and dare I say reporting, which I do believe is now becoming much more nuanced,” Hoggett told the conference.

The City has been buoyed by news of two potential floats in recent weeks as Cambridge-computer firm Raspberry Pi confirmed plans to float and fast-fashion giant Shein reportedly prepares to swap its listing plans from New York to London.

However, the capital’s IPO market has been plagued by the perception of a gaping valuation gap with New York and the belief that companies fetch higher price tags on the New York Stock Exchange and Nasdaq.

Scores of bosses, including Shell chief Wael Sawan and Plus500 founder David Zruia, have threatened to leave London because they believe they are being undervalued by the City’s markets.

While Hoggett dismissed the suggestion of a large valuation gap with the US, she claimed that the liquidity on the London Stock Exchange had been weighed down by a stamp duty on shares, which forces investors to pay a 0.5 per cent charge on UK share transactions.

“There is an argument about UK liquidity being lower,” Hoggett said. “Given the pernicious effects of stamp duty, there are some structural differences in where the liquidity is traded in the UK compared to other jurisdictions, but there are not material differences in the ultimate total quantity”.

After being adjusted for the number of companies on the market, the total quantity of shares trading was comparable to the US, she claimed.

Separate data today found that the UK still dwarfs its European peers in terms of total share sales, with $11.3bn issued so far this year compared to Paris in second place with $3.4bn, according to data compiled by Bloomberg. 

The criticism of the share tax follows a volley of calls from top City figures to scrap the levy in a bid to unlock a flood of capital into the market. Firms including Abrdn, Peel Hunt, Revolut and Monzo have all put their names to calls to ditch the duty in recent months.

However, the Treasury has so far remained steadfast behind the charge and says it is a key revenue raiser. In total, the charge brings in around £3bn to the government’s coffers every year.