The London Stock Exchange (LSE) should capitalize on the rise of special purpose acquisition companies (SPACs), cryptocurrencies, and green finance, according to Xavier Rolet, the former CEO of the LSE.
In a recent paper co-authored by Rolet, now chairman of Shore Capital Markets, he emphasizes the necessity for the LSE to adapt to global market innovations, particularly in the wake of the United Kingdom’s departure from the European Union. This adaptation is crucial to mitigating the impact of lost trade flows to EU financial hubs.
One key recommendation is to rethink the regulations governing SPACs, which have seen significant success in the United States. Data from Refinitiv indicates that in 2021 alone, 143 SPACs raised approximately $43 billion in the U.S. Rolet asserts, “The UK must urgently embrace the SPAC revolution. While numerous differences exist between our markets and those in the U.S., the desire for permanent listed capital remains strong among ambitious UK and European entrepreneurs. Notable companies like Spotify and Markit underscore this potential. SPACs are a financial tool that should not be overlooked; their agility could unlock considerable opportunities for innovative business leaders and dealmakers in the UK and beyond.”
Additionally, Rolet points out the growing institutional interest in the expanding cryptocurrency market. He calls on the UK Government to attract top talent in the field to establish regulations that would position London as a leading, secure financial hub for cryptocurrencies. “This will not be an easy task, but it is vital for the UK not to miss out on the cryptocurrency market,” he writes. “This area illustrates how regulatory independence can foster agility, especially if UK regulators collaborate with leading global central banks to develop a shared regulatory framework. Effective financial services regulation must align with a proactive immigration strategy that attracts and retains the best global talent.”
Regarding sustainable finance, Rolet argues for a unified effort from both the government and the financial sector to harness innovative ideas emerging from UK institutions to address climate change. “Achieving this requires ambition, vision, and a clear strategy that connects academic institutions and innovation centers with equity capital markets,” he states. He also suggests that reforming Solvency II regulations could empower insurance companies and pension funds to invest significantly in the green revolution.