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LSE .general presentation


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The London Stock Exchange is a stock exchange located in the City of London in the United Kingdom. As of December 2011, the Exchange had a market capitalisation of US$3.266 trillion (short scale), making it the third-largest stock exchange in the world by this measurement (and the largest in Europe). The Exchange was founded in 1801 and its current premises are situated in Paternoster Square close to St Paul's Cathedral in the City of London. The Exchange is part of the London Stock Exchange Group.

Published in: Economy & Finance

LSE .general presentation

  1. 1. Listing on the London Stock ExchangeMarch 2011
  2. 2. Overview• The Group• Peers• Investors• Regulation• Liquidity and Performance 2
  3. 3. London Stock Exchange GroupDiversified international exchange business with new partnerships evolving Partnerships / Joint Ventures: 3
  4. 4. We operate the largest and most liquid equities market in Europe Domestic market capitalisation • 2,100 UK-incorporated companies are currently of European exchanges as at 30 Nov 2010 listed/quoted on our London markets, sharing an aggregate market cap close to USD 3 trillion 3,000 2,500(USD bn) 2,000 1,500 • Close to 600 international companies are 1,000 currently listed/quoted on our markets, with 500 0 aggregate market cap reaching nearly USD 3 LSEG NYSE DBAG SIX BME NASDAQ trillion. Euronext OMX (Europe) Nordic Average daily traded value (ADTV) and number of trades in shares (as at 30 Nov 2010) • With close to 3,000 companies listed/quoted on 12,000 Trading Volume 7,000.00 its markets and over 500 member firms, the 10,000 Transactions 6,000.00 London Stock Exchange Group operates one of Number of transactions 5,000.00 8,000 the most liquid cash equity marketplaces USD (m) 4,000.00 6,000 globally. 3,000.00 4,000 2,000.00 2,000 • During 2010, an average of nearly USD 10bn 1,000.00 worth of shares were traded daily on the 0 London NYSE Deutsche BME SIX Swiss NASDAQ 0.00 LSEG’s markets, more than any other exchange Stock Euronext Borse Spanish Exchange OMX Exchange (Europe) Exchanges Noridic in Europe. Source: World Federation of Exchanges 4
  5. 5. London Stock Exchange is the most international exchange in the world1Overview of countries with companies admitted to London Stock Exchange primary markets in 2011 (1) By number of international companies admitted to trading. Source: London Stock Exchange statistics 5
  6. 6. London Stock Exchange is a global leader in IPOs Number of IPOs700600500400300200100 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 LSE NYSE Euronext (US) Hong Kong Deutsche Borse NYSE Euronext (Europe) Shanghai Source: World Federation of Exchanges 6
  7. 7. London Stock Exchange is a global leader in IPOsTotal number of companies admitted to trading as at 31 August 2010 NORTH AMERICA EMEA RUSSIA AND CIS 231 95 191 82 103 50 48 79 57 20 35 5 1 LSE NYSE ENXT NASDAQ DBAG LSE NYSE ENXT DBAG NASDAQ LSE NYSE DBAG SOUTH AMERICA ASIA INDIA 151 54 103 97 23 26 13 8 5 6 2 4 1 NYSE LSE NASDAQ ENXT NYSE LSE DBAG ENXT LSE DBAG NYSE NASDAQ ENXT Source: relevant exchange websites 7
  8. 8. London Stock Exchange is a global leader in IPOs Comparison of market capitalisation of listed issuers, by sector 1,600 1,400 London Stock Exchange 1,200 NYSE Euronext (Europe) Deutche Bourse 1,000 Hong Kong SEUSDbn 800 600 400 200 - Basic Materials Communications Retail Energy Financial Funds Industrial Source: Bloomberg 8
  9. 9. We provide access to the world’s largest pool of international equity assets* International equity AUM in key Total international equity AUM by type of financial centers investor (USDbn) 173 Banks 139 122 Hong Kong 86 Frankfurt USD 179bn 46 USD 171bn London New York Frankfurt Paris HKParis LondonUSD 278bn USD 1.15trillion Investment 658 advisers 330 93 50 36 London New York Paris HK Frankfrut Pension Funds 263 252 New York & insurance USD 1.04trililon 82 76 London New York HK Paris *Based on international equity AUM in key financial centres. Source: Ipreo, Dec 2010 9
  10. 10. London Stock Exchange offers a choice of routes tomarket, equally to UK and international companies Commercial Companies equity shares and funds Commercial Companies all types of shares Depositary receipts Main Market Options, warrants, derivatives and fixed income OTHER Growth Companies Flexible route for DRs wishing to use domestic accounting standards Private equity, hedge funds, complex and single strategy funds 10
  11. 11. Every company admitted to our primary markets can increase theirvisibility by using our brand marks 11
  12. 12. Main Market – key listing requirements • Compliance with the Listing Principles (LR 7) • Appointment of a sponsor • 75% of the business to be supported by a revenue earning track record • Control over the majority of the entity’s assets • Unqualified working capital statement • Combined Code (only UK companies, non-UK companies have to state compliance with their domestic corporate governance and explain any substantial differences) (In addition to…) • Prospectus approved by the UKLA • Minimum 25% shares in public hands* • Minimum market capitalisation £700,000 • 3 years of audited financial information (or such shorter period since company has been in operation) • Free transferability of securities • Working capital statement covering 12 months (for commercial companies issuing shares only) • Compliance with the London Stock Exchanges Admission and Disclosure Standards * FSA will consider lower free float if it satisfied that there is sufficient liquidity in market 12
  13. 13. Key regulatory comparisons London Stock London Stock Exchange HKSE NYSE Euronext DBAG Exchange - DR Corporate UK Corporate Governance German Corporate Domestic governance Depending on the Code (mandatory for n.a Governance for governance code applies jurisdiction Premium listing only) German inc. issuers Different criteria Free Float 25%1 25%1 depending on the 25% 25% size of the company Accounting IFRS or equivalent2 IFRS or equivalent2 US GAAP or IFRS IFRS or equivalent2 IFRS or equivalent2 standard [local GAAP on PSM] 3 years audited 3 years audited accounts accounts 3 years audited 3 years audited 3 years audited Accounts (or such shorter period the (or such shorter period the accounts accounts accounts company was in operation) 3 company was in operation) 3 Working Capital Cash Flow Yes Not required No No statement Statement Sponsor Only for Premium listing Not required Compliance Adviser Not required Listing Agent UK Corporate Governance Domestic Domestic Domestic governance Depending on Remuneration Code (mandatory for governance code governance code code applies jurisdiction Premium listing only) applies applies Quarterly Interim (unaudited) Half yearly Interim (Half yearly) Reports Annual Interim Half yearly Annual Annual Annual Annual Investor Conference Competent Securities and UKLA, AFM, AMF, UKLA UKLA BaFIN Authority Futures Commission CBFA, CMVM Inside Inside information must be disclosed to the market without delay informationThe exchanges represented here are only a sample of our competitors 1FSA will accept lower free float if its is satisfied that there will be sufficient liquidity in the market 2Japan and theUS, China, India, South Korea and Canada 3or such shorter period the company was in operation (companies pursuing Premium listing are required to show a full three year track record) 13
  14. 14. Indicative IPO transaction timelineTimeline +6 months +3 months +1 monthCompany Transaction structure and board preparations Discussions with existing shareholders Due diligence Engage with sponsor (if applicable)Financial Tax planning IFRS preparation (if needed) Audit Financials and valuations Working capital statements Long form financials Forecasts and offer size agreed Pathfinder Prospectus ready approvedLegal Suitability and due UKLA approval stage Admission Document drafting diligence Early engagement with the UKLA Memorandum and articles of association / underwriting agreement/ Board minutes/ depositary agreement and other documentsInvestors and Road show presentation and business case Road showdistribution Test marketing Preparation of research Pre marketing Bookbulding Pricing Pricing modelPR Company profile and storyLondon Stock Preliminary discussions and ongoing support Admission to tradingExchange 14
  15. 15. London Stock Exchange offers a choice of tradingplatforms, equally to UK and International companies Nov 10 Value Nov 10 Average traded Volume transaction Type of securities Platform Type (USDm) traded value (USD) on the platform SETS Order Book 168bn 11.6m 42k Shares IOB Order book 23bn 462k 50k Depositary Receipts SETSqx Auction driven 2.2bn 52k 42k Shares platform SEAQ Quotation Service 2bn 188k 10k Shares • Powered by the same technology • All Member firms have unrestricted access to all trading services • Services designed in cooperation with trading community to offer optimum liquidity potential 15
  16. 16. London Stock Exchange offers a stable investment pool for companies listed on our markets 350 Index performance Standard deviation in 300 FTSE 100 performance of key LSE Emerging indices 250 MSCI Emerging 4.5Index, (1 Jan 2005=100) 4 FTSE 100 200 3.5 Emerging 3 Markets 150 Developed Standard deviation 2.5 Markets 2 100 1.5 50 1 0.5 0 0 Apr-05 Aug-05 Apr-06 Aug-06 Apr-07 Aug-07 Apr-08 Apr-09 Aug-09 Apr-10 Aug-10 Aug-08 Dec-04 Dec-05 Dec-07 Dec-08 Dec-06 Dec-09 2008 2009 2010 Securities trading on the LSE have significantly lower volatility Return on investment in LSE listed emerging market compared to other markets. companies is higher than compared to emerging market companies on other markets LSE Emerging index represents the performance of all emerging stock on the London Stock Exchange. Source: LSE calculation and Bloomberg 16
  17. 17. London Stock Exchange Group is a leader in trading emerging market securites Median Bid-Ask Spread for Median Bid-Ask Spread for emerging market securities FTSE 100 Securities VTB 0.05% LLO YDS 0.03% ENRC 0.06% BG GRO UP 0.04% HSBC 0.05% Fresnillo 0.08% On the London Stock ROYAL DUTCH SHELL 0.05% Severstal 0.12% RIO TINTO 0.05% Exchange issuers from Sistema 0.13% ANGLO AM ERICAN 0.06% emerging markets enjoySurgutneftegas 0.15% BP 0.06% comparable liquidity ASTRAZENECA 0.06% Kazakmhys 0.15% with the world’s most VO DAFONE 0.06% Rosneft 0.17% BAT 0.06% liquid securities. Gazprom 0.19% BARCLAYS 0.07% Novatek 0.19% BHP BILLITON 0.07% SABM ILLER 0.08% NLMK 0.20% STANDARD CHARTERED 0.08% Essar Energy 0.20% XSTRATA 0.12% SETS traded IOB traded Allocation of a security on IOB or SETS does not significantly affect its liquidity Source: Bloomberg, Dec 2010 17
  18. 18. IOB - Dedicated DR trading platformLondon Stock Exchange operates the Clearing and Settlement:International Order book - a dedicated • Our relationship with LCH.Clearnet, x-clear andDepositary Receipt trading platform. Euroclear UK and Ireland ensure that trades are cleared and settled quickly and cost effectivelyBenefiting from common underlyingtechnology infrastructure to SETS, the IOB •Central Counter Party (CCP) service is extendedprovides a focussed arena for the trading to all SETS securitiesof DRs with a market model and tradinghours aligned with its distinct trading •All IOB securities for which market participantsmembership base. request the service have the CCP service enabledIn addition DRs are also traded on • Member firms can use a netting services with aTurquoise the London Stock Exchange clearing house to have their trading fees reducedoperated MTF and therefore enhance liquidity 07:00 08:00 08:15 15:30 15:40 17:15 Market Opening IOB Closing Order open auction Continuous Trading Model auction manage- ment Continuous trading 18
  19. 19. London Stock Exchange enables companies listed on ourmarkets continuous access to capital markets• Institutionally focussed domestic and Money raised by issuers listed on theinternational investor base investing London Stock Exchangethrough the London Stock Exchange 30,000 140,000creates a financing source for Money raised in Futher 25,000 Money raised at IPOs 120,000companies throughout the economic issues (USDm) 100,000 20,000cycle. (USDm) 80,000 15,000 60,000 10,000•Companies across the London Stock 40,000 5,000Exchange’s markets raised a record 20,000USD 137 billion in new and further 0 0issues during the course of 2009. 2007 2008 2009 YTD 2010 Money raised in further issues Money Rasied at IPO• Recovering investor sentiment hasseen over USD 10 billion raised by 55IPOs, between January and August2010. Source: London Stock Exchange Statistics 19
  20. 20. Performance of companies recently admitted to tradingon the London Stock Exchange and other exchanges Performance of companies admitted to trading over the last 12 month period 120 115 110 105 100 95 London Stock Exchange 90 NYSE Euronext (US) 85 Deutsche Borse NYSE Euronext (Europe) 80 t t+10 t+20 t+30 t+40 t+50 t+60 t+70 t+80 t+90 t+100 t+110 t- admission date Source: Bloomberg, Oct 2010 20
  21. 21. London Stock Exchange remains the centre of choice for international companies London Stock NYSE Euronext DBAG HKSE Exchange LondonChoice Choice of markets for Limited choice Choice of markets for No choice issuers issuersInvestment pool Investment pool USD Investment pool USD Investment pool USD Investment pool USD 1.8 trillion* 445 billion* 217 billion* 214 billion*FTSE indexation FTSE UK series No indices inclusion Not flagship indices No indices inclusion inclusion (including FTSE 100)Trading services Tiered trading Access to a Universal n/a No variety of tradingplatforms services to provide Trading Platform – services maximum visibility reduced visibility and liquidityMember firms Admitted to trading Admitted to trading Admitted to Xetra platform with 400 platform with 221 trading platform member firms member firms (not all of which have access to all ENXT markets)Peer comparisons Peer comparison No other companies Limited comparison Only two on the market international companies on the market in different sectors *Source: Ipreo, Sept 2010 21
  22. 22. Conclusions The London Stock Exchange is the pre-eminent global listing centre and the most international exchange1 in the world, with close to 600 international companies from over 70 countries, listed and traded on its markets. The London Stock Exchange offers a wide choice of routes to market. The choice of markets is open equally to UK and international companies, and differentiated trading platforms offer tailored solutions to maximise liquidity and investor participation. We provide cost-efficient access to the world’s largest pool of international equity assets.  Over USD 1.85 trillion of equities are managed out of London, with USD 1 trillion invested in international equity assets, more than any other major financial centre. With close to 3,000 companies quoted on its markets and over 500 member firms, the London Stock Exchange Group operates one of the most liquid equity marketplaces globally. 1 by number of international companies admitted to trading 2Source: IPREO Sept 2010
  23. 23. ContactsPrimary market account managersRegion Relationship Manager Telephone emailUK Bruce Rayfield + 44 20 7797 4377 Mark Fahy + 44 20 7797 6396 Mark Russon + 44 20 7797 7397 mrusson@londonstockexchange.comAmericas & Israel Graham Dallas  +44 20 7797 4055 gdallas@londonstockexchange.comAsia Pacific Jane Zhu (HK)  +852 3555 6390 Julia Wang (Beijing) +86 10 5833 2202 Yi Xie (London) +44 20 7797 4743 yxie@londonstockexchange.comContinental Europe Luca Peyrano  +44 20 7797 3340    India, Pakistan, Middle East and Ibukun Adebayo  +44 20 7797 1085 iadebayo@londonstockexchange.comAfrica Richard Webster-Smith  +44 20 7797 1058 rwebstersmith@londonstockexchange.comRussia and CIS Jon Edwards  +44 20 7797 1599 Maksim Kondratjuk +44 20 7797 4307 mkondratjuks@londonstockexchange.comProduct management and developmentMarket Product Manager Telephone emailListed/Regulated Markets Joanne Dutton +44 20 7797 3622 Darko Hajdukovic +44 20 7797 3306 dhajdukovic@londonstockexchange.comAIM Marcus Stuttard +44 20 7797 3364 23
  24. 24. DisclaimerThis document has been compiled by the London Stock Exchange plc (the “Exchange”). The Exchange has attempted to ensure that theinformation in this document is accurate, however the information is provided “AS IS” and on an “AS AVAILABLE” basis and may not be accurateor up to date.The Exchange does not guarantee the accuracy, timeliness, completeness, performance or fitness for a particular purpose of the document or anyof the information in it. The Exchange is not responsible for any third party content which is set out in this document. No responsibility isaccepted by or on behalf of the Exchange for any errors, omissions, or inaccurate information in the document.No action should be taken or omitted to be taken in reliance upon information in this document. The Exchange accepts no liability for the resultsof any action taken on the basis of the information in this document.All implied warranties, including but not limited to the implied warranties of satisfactory quality, fitness for a particular purpose, non-infringement, compatibility, security and accuracy are excluded by the Exchange to the extent that they may be excluded as a matter of law.Further, the Exchange does not warrant that the document is error free or that any defects will be corrected.To the extent permitted by applicable law, the Exchange expressly disclaims all liability howsoever arising whether in contract, tort (or deceit) orotherwise (including, but not limited to, liability for any negligent act or omissions) to any person in respect of any claims or losses of any nature,arising directly or indirectly from: (i) anything done or the consequences of anything done or omitted to be done wholly or partly in reliance uponthe whole or any part of the contents of this document; and (ii) the use of any data or materials in this document.Information in this document is not offered as advice on any particular matter and must not be treated as a substitute for specific advice. Inparticular information in the document does not constitute professional, financial or investment advice and must not be used as a basis formaking investment decisions and is in no way intended, directly or indirectly, as an attempt to market or sell any type of financial instrument.Advice from a suitably qualified professional should always be sought in relation to any particular matter or circumstances.The contents of this document do not constitute an invitation to invest in shares of the Exchange, or constitute or form a part of any offer for thesale or subscription of, or any invitation to offer to buy or subscribe for, any securities or other financial instruments, nor should it or any part ofit form the basis of, or be relied upon in any connection with any contract or commitment whatsoever.London Stock Exchange and the London Stock Exchange coat of arms device are registered trade marks of London Stock Exchange plc. Otherlogos, organisations and company names referred to may be the trade marks of their respective owners. © October 2010 London Stock Exchange plc 10 Paternoster Square London EC4M 7LS Telephone +44 (0)20 7797 1000 24