Financial services sector cool on the idea of regional stock exchanges in the UK

Written by Ray Clancy

Thursday, 02 September 2010 10:15

There is little enthusiasm within the UK financial services sector for Government plans to revive regional stock exchanges, a new survey shows.

The Government raised the prospect of setting up exchanges around the UK as a source of investment for smaller business. In the past cities such as Liverpool had their own Stock Exchanges and officials want to explore the prospect of reviving them.

But a survey by the Chartered Institute for Securities and Investment has found that 76% are not in favour with 24% thinking it is a go idea.

Those against the idea point out that in the current days of electronic trading there is no real need for local exchanges. ‘With the emergence of online trading, regional bourses are an obsolete concept,’ said one respondent.

‘They are from another age of investments buying. We have already merged national exchanges into transnational exchanges, why would we need regional exchanges?’ said another.

But supporting the proposal, one respondent said: ‘Why should all financial services be concentrated in the City to the detriment of other regional UK centres? Bring back the regional stock exchanges ASAP, starting with Liverpool which has the greatest tradition of wealth management and wealth creation outside London in the UK’.

Another said: ‘Local funding will have a positive social impact on the communities in which we live by bringing investment to small businesses that may otherwise struggle to source funding’.

The Federation of Small Businesses is a supporter to the idea. It wants to curb the current reliance on big banks for funding and is urging the government to investigate alternative sources such as regional stock exchanges or credit unions.

However, veteran stock broker and former Conservative Lord Mayor of Leeds, Keith Loudon of Redmayne Bentley, said that while regional markets could connect businesses to investors, they would not provide the instant trading ability that modern markets demand.

‘Sadly it’s just not practical to have a stock exchange in Leeds for the basic reason that there isn’t a flow of trade. You need buyers and sellers on a regular basis, not just every three months,’ he explained.

Chris Fletcher, of Greater Manchester Chamber of Commerce, said a ‘fear factor’ and lack of understanding might deter some of its members. ‘They could probably see the advantages in raising funds, but might shy away from relinquishing control,’ he added.

In 1914 Britain had no fewer than 22 such institutions, including Bristol, Halifax, Leeds, Cardiff and Sheffield. Eleven remained open until the 1970s, when they amalgamated with the London Stock Exchange. Liverpool’s carried out limited functions as recently as 1991.