Julia Hoggett，LSEG plc CEO：伦敦证券交易所的神话与现实

We've disconnected society from our capital markets. Stamp duty is a perversity in the UK. We charge people to invest in UK stocks, but we don't charge them to invest in US stocks or European stocks. We basically created a world where cheap was good for financial services.

In the last 10 years, only 20 UK companies have listed in the US that have raised over $100 million. Of those, 9 have already delisted. Only 4 are trading up, and the rest are trading down by over 80%.

Julia, I'm very excited for this. Thank you so much for having us in the office today.

Oh, it's a pleasure. Welcome to a very sunny, very warm, very unusual London day.

It's a beautiful view. I would love to start with a little bit of context. How did you come to be CEO of the London Stock Exchange? Take me to the moment when you accepted and took on the role.

Oh my word. By accident is the honest answer to the question. I always described my career as a series of answering exam questions. I'm actually a sociologist who specialized in sub-Saharan East Africa by training. I went into the City to find out how Malawi operated in the global economy, and I've answered a series of exam questions ever since.

In the summer of 2020, Apple was worth more than the FTSE 100 for the first time. I was then at the FCA as director of market oversight, and that evening I literally wrote down everything I thought I could try and influence to change so that that didn't happen again. The next day, the phone rang and it was a headhunter, and her first question was, "Why haven't you applied for the LSE job?" I thought, "Well, I know the exam question I want to answer."

Should I stay at the FCA, where I've got a certain amount of influence over how our markets function? Or should I explore coming to the LSE? The rest is history.

What did you write down as the exam answer?

I always jokingly say that the list was too short in hindsight.

Can I ask what you wanted to change when you came in? Is that very different from what you see now as the core objectives you still need to change, or have they stayed the same?

The theme has stayed very similar. My theory was that the UK has all the raw ingredients. We have world-leading universities, some remarkable entrepreneurship already, and a strong startup culture in this country. We create more unicorns than anywhere outside the US and China, and we're a world-leading capital market by any measure.

We don't think of ourselves that way, and we don't talk about ourselves that way as a nation, but actually we have all of those raw ingredients. The City has done a very good job over the last 30 years of driving the UK's place as a global financial center. It's done a less good job of driving the UK domestic economy.

The key question was: those things don't need to be oppositional. You can walk and chew gum at the same time. You can aim to do both.

Why has the City not done that for the domestic economy?

I think, in part, because of the strength of our role as the locus of the EU's single market. When you're serving everybody everywhere across the EU, you can get a bit disconnected from your own domestic economy. I think some of the regulatory changes served to do that as well.

We used to have big pension funds that invested a huge amount of their assets in driving risk capital into our economy. When we did, our growth rates were as high as anywhere else in the world, and our capital markets were as vibrant as anywhere else in the world. We've unpacked those 2 things over the last 20 or 30 years, and we've disconnected society from our capital markets.

How did that happen? What were the core moments when that disconnection occurred?

I think, in retail, it's been a combination of regulatory reform. We've created a challenging environment for our regulators where, if something goes wrong, they wind up in front of Parliament. Their natural instinct as a consequence is to make the things that they're responsible for harder and harder to do. They put higher and higher walls up.

Under the guise of protecting retail, we've arguably disenfranchised them a bit. We've made it harder to access advice, and we've made it harder for them to access regulated markets. Yet our user journey in the cryptocurrency world is incredibly straightforward.

Actually, I want people to feel that they've got a stake in their economy, in the companies that are going to create the jobs, the innovation, the growth, and the productivity that pays for the NHS and our defence. That's what we all, I think, care about as Brits. Yet we've disconnected people from that.

The other leg is what we did on pension reform many, many years ago. After the Maxwell pension scandal, we basically did 2 things. We brought company defined-benefit pension schemes onto the balance sheet. You're probably not old enough to remember when we used to refer to British Airways as a small airline with a large pension fund attached, but we did.

We then put in an accounting treatment that meant that the matching adjustment on the pension fund went through the P&L of the company every quarter. No CEO wants to have their earnings, and the volatility of their earnings, entirely attributable to their pension fund rather than to the underlying business.

So what did we do? We shuttered those defined-benefit pension schemes and then de-risked them so that they weren't too volatile, which meant we reduced our investment in risk assets as a nation. If you think about defined-benefit pension schemes, most countries treat them as a way of mutualizing long-term risk-taking, both for the sake of the returns of the pensioners and for investment in the country.

We stopped doing both of those things. I think you can trace some of the reduction in growth that we've had post-GFC to that trend over the previous 20 or 30 years.

The great benefit of having done that to ourselves is that we can undo it to ourselves. That's one of the things I feel supremely confident about: as a nation, we have all of these raw ingredients. We have the second-largest pool of institutional capital in the world, and we have great universities. We have all of these things. We just need to get back to mixing those ingredients in the right kind of cake.

If we think about that, you said that the regulatory enhancements or additions have made it harder to access different products. Do we need to deregulate, then? If so, what do we need to do to deregulate effectively?

Deregulation, I think, is the wrong word because that sends people running for the hills in fear. This isn't a bonfire of regulation or any of the things that people have accused it of.

I think it is about getting back to what we regulated for. What are the outcomes we want to achieve? I was saying this to someone the other day: very often, when you write regulation, you've got a very well-intentioned thing that you want to achieve. Then your regulation creates a policy for how you achieve it, but nobody checks. Everybody fixates on following the policy and forgets to check whether the policy produced the outcome that they wanted in the first place.

If we want financially literate, properly enfranchised retail investors who have a stake in society, have a good savings rate, and reinvest in our own economy, that should be the objective. If, when we had done our pension reforms in the 1990s, we'd said, "Okay, 54% of all the investment in our capital market is from UK pension funds and insurers. That's the investment in domestic risk capital that we want as a nation. Let's monitor it and make sure that we don't have a deleterious effect on that investment when we make these changes," we'd have had a conversation about pension reform 20 years ago, not 2 years ago, when the task force that I chair triggered that conversation.

I think that's the difference. We now need to get back to what outcome we want to achieve and whether we're really achieving it.

What is the outcome we want to achieve? We basically need to be able to use our own resources and our own capacity to invest to back ourselves as a nation. It's very simple, but we need to do so in a way that means we actually do it for the way companies are formed today.

If you look at quite a lot of the large private companies today, the next ticket they need their VCs and PEs to write isn't necessarily one they're in a position to write. They're now so big that they need the public markets as a takeout because that's where the true scale is in the capital.

If you want to start having pension funds invest in you at an earlier stage as a private company, you need to be able to operate in the way that they can operate as well, within the regulatory constraints that they operate in.

Why can we not just have our pension funds invest directly, like CPPIB or Ontario Teachers' Pension Plan do?

That's an awful lot of what UK regulatory reform is looking at. A lot of the things that are on the reform agenda for the UK—I should talk you through it rather than jumping backwards and forwards—we talk about the reform agenda in the UK as being 5 fingers and a glove.

The logic is that it's nice to have a thumb, but if you don't have the other 4 fingers, it's not as useful as a hand. You need to actually get everything done.

What's the quality of your primary and secondary capital-raising rules? Do they actually allow the broadest range of companies to come onto your market? Then, do they give them the maximum strategic flexibility once they get onto the market? We changed our rules last year.

We are now on a par with anywhere else in the world in terms of the flexibility and usefulness of our listing rules. They had not actually been changed since the 1980s in any material fashion. It is just as easy to list here as it is anywhere else.

The second one is: are we incentivizing the sell side—the investment banks and the brokers—to write high-quality research on the next generation of companies that are coming through, so that investors can genuinely understand how to value that next proposition? In Europe, we had created rules that basically said the banks could not charge trading commissions to subsidize their research provision. That reduced the quality of research provision in Europe as a whole. The UK reversed those rules last year and said, “That didn’t work. Let’s go back to basics.”

To answer your question about pension funds, the UK had done several things. I talked about what we did on our defined-benefit schemes. We took our defined-benefit schemes and basically talked about them in the language of de-risking, so they bought an awful lot of fixed-income and debt products rather than equity products. Our defined-contribution schemes that replaced them were not supposed to be the 27,000 or so that we have, which are all very small and advised by lawyers and trustees. They were supposed to be relatively big, sophisticated, consolidated pots. That didn’t happen.

We also regulated them on cost, not on net return. Unlike the CPPIB or the Ontario Teachers’ Pension Plan in Canada, our current pension scheme is either de-risking or of insufficient scale, and is wrapped with insufficiently sophisticated advice to be able to invest in a portfolio of private companies. When the chancellor announced the pension review—and Labour actually put it in the manifesto—it was designed to do all of that: to consolidate our pension schemes into bigger individual funds that can then act exactly like the Canadians or the Australians. I’d love any founder in the UK to be just as proud of having a UK pension fund on their cap table as they are of having Ontario Teachers’ on the cap table.

Do you think we’ll be able to move the investor mindset within those pension plans to invest in higher-risk growth assets in the UK?

This is partly where PISCES, the crossover market, comes in, because the logic is that those pension funds, at the moment, have had a mindset of regulating our pension funds on cost. Therefore, cheap is good, and private companies are not cheap to originate. The ability to actually understand them and track them, and then having to start with a small ticket, all that kind of stuff is not straightforward to do. This is partly about connecting these dots.

If you look at the third finger of the five fingers of the glove, which is pension and retail reform, we’ve also had a thing called the Mansion House Compact, in which our 11 largest defined-contribution default schemes have committed to committing 5% of their total assets to private companies by 2030.

Is that private companies in the UK?

Private companies in the UK and around the world, but predominantly in the UK, we hope. The consequence of that is that they’re having to work through how they need to reorganize and restructure themselves to be able to participate in this market.

You should start with the objective of the thing you’re trying to achieve. The UK creates great scaling companies. It has a huge amount of institutional capital. It has traditionally been in the valley of death in terms of its financing, but actually, that’s where a huge amount of value is created for an economy. We can either say, “No, we don’t have it, and we’re not going to bother trying to build it,” or we could take every single step we can to make sure that we’re incentivizing and building it.

It isn’t that we don’t have great stock pickers in the UK. We’ve got VC funds and PE funds that are very good. There is a reason why the Canadians, the Australians, and the US endowments all come here, and the second office they ever set up is in London. There are great assets to buy here. It is about bringing our institutional ecosystem together with that VC and PE ecosystem to supercharge the scaling and capability development of that part of the ecosystem.

But it is what we used to do in the City. For many, many years, stock-picking was the classic thing that the City did. We slightly regulated it out by saying you need to regulate on cost, not on net return. What the government is now doing is consolidating our pension funds into bigger pools, trying to accelerate consolidation of DC, and getting them to look at fiduciary duty as value for money, which is net return, not cost. In other words, being able to buy as LPs and being able to co-invest.

You need great assets to invest in. How do I say this? Why are so many companies not choosing to list in the UK? When I interviewed Nick at RAV [?], I think about the fastest-growing technology companies, and I asked him, “Are you going to list here?” I want them to list here. I love London. I walk past here with my mom, and they go, “No, no, America all day.”

The honest answer is that the perception and the reality are not the same thing. In the last 10 years, only 20 UK companies have listed in the US and raised over 100 million. Of those, 9 have already delisted. Only 4 are trading up, and the rest are trading down by over 80%. That’s data as of today.

The idea that the grass is always greener in the US is not true. The challenge for a company under a certain size in the US is that the US market works incredibly well for the Magnificent 7. It doesn’t work as well when you’re smaller. The investor base is predominantly domestic. If you’re not in a major index—and 60% of the US market is now tracking a major index—the risk is that you’ll get forgotten. You’ll get sold on a headline because something happens in the UK or something happens in Europe or another one of your major markets, but you won’t have that indexation drag back, which is half why we’ve seen the performance that we have in terms of the companies that have gone to the US.

I understand why that’s not the perception. I understand why the media narrative is different. I understand why there are some investment banks who want people to go to the US because they make double fees. I get it. The simple reality is that the narrative we’ve pushed in the media and the actual data as to what the experience of people listing in London versus the US is are very different.

I get there’s a sexiness in the US. I get there’s a noise there. But I do think there are—I've seen what Nick said. He made a point about stamp duty, and he made a point about liquidity. If you actually look at the data on liquidity, the free-float-adjusted turnover in London is higher than it is in the S&P and the Nasdaq.

If you look at just the absolute volume of shares, based on the fact that you’ve got companies that are worth over 1 trillion, yes, the absolute volume of shares traded in a day is higher. The percentage of a company’s free float that is turning over in a given day is higher on the FTSE 100 than it is on the S&P 500 or the Nasdaq. Again, that sort of narrative is the wrong kind of thing.

We also know, though, that there are places where the data is wrong. If you go to Yahoo Finance and look at the liquidity in London versus liquidity in the US, it’s actually wrong. The last time we checked it, it was wrong by a factor of over 3. There are things like that where we have to correct the data to make sure people are actually using the right stats and looking at the right data.

Stamp duty is a perversity in the UK. We charge people to invest in UK stocks, whereas we don’t charge them to invest in US stocks or European stocks. It is weird. It brings in about 3 to 4 billion of money for the Treasury every year. They need that money, so we need to give them an alternative as to what to replace it with.

But I have been very public: it’s a perverse tax. We tax people to buy Aston Martin shares in this country. We don’t tax them to buy Tesla or Porsche. Last time I checked, Aston Martin here is going to employ hundreds of people in this country, and they actually build cars here. We have done some strange things to ourselves as a nation.

Everyone says the scale of the buy-side book here is so immeasurably different compared to the US. Is that not true?

Look, 60% of the investors in the UK are international investors. The same people who can buy you in New York can buy you in London. The key issue is: do you want index inclusion?

You’re not going to get index inclusion in the first year in the US, and you might not get it at all. You don’t get into the S&P 500 unless you’ve either got substantially all your revenues in the US or you’re a US-based company. Even then, it’s not a direct thing.

If you come in in the top 75% of the FTSE 100 in terms of what your valuation would be when you IPO, you can go in in 5 days. All of that index money would follow you on day one because it would have to. You can also get access to all of the major institutions in the US. Again, the narrative and the actual reality are very, very different.

Certainly, what I’ve heard from talking to companies in the last year or so is that increasingly, if you’re a 10 to 20 billion company, don’t go to the US because you’ll get lost. I talked about the 20 companies that have raised over 100 million going from the UK to the US. There are 6 that have come the other way, from the US to the UK, in that time as well.

In addition, 2 of the most successful IPOs on the AIM market—our growth market—last year were North American companies that came to London because they felt underserved by the US. They were up 32% by the end of the year.

So, while we’re on the theme of myth-busting, apparently there’s a 45% valuation discount in the UK.

Totally. There’s actually some very useful analysis that’s looked at pairs of companies side by side. For like-for-like companies, adjusted for their growth rates and the actual underlying performance of the business, you’ll find as many companies trading up in the UK as trading up in the US. The rest are trading largely in line.

I’ve seen some recent, very interesting analysis that basically says if you’re a company in the UK with exposure, for example, to the US market, and you’re growing well there, you’ll get more rewarded for it in the UK market than you will in the US market or the European market. Quite a lot of the underlying analysis says it’s to do with the fundamental growth rate of the company, not the difference in valuation in the UK.

Do you not think if Deliveroo was in the US, it would be valued differently?

That feels like a business that’s been hit hard by a UK mindset around the type of business that it is, the low-margin nature of it, and it’s just too difficult for us to wrap our heads around.

Right. I think that’s a company that’s also had other challenges and other transactions that have had an impact on the valuation.

But I—look, I’ll give you an example. When Arm listed here, it traded at a higher valuation multiple than any of its peers anywhere in the world. So, again, the right company with the right story is going to get access to exactly the same investors.

They’re going to do it more cheaply and at less cost than they would in the US. They’re going to get indexation immediately if they’re a UK company. They’re going to get the same liquidity they would in the US. They’re not going to pay fees anything like the same amount. They can do an ADR in the US and get exposure to the incremental investor base who might not buy in London, but that isn’t all the major funds that would buy them in London.

Can I ask, if you have the same investor base that is, so to speak, crossing over or accessing the UK markets as well as the US, why is it not just a dual-listing future where we say, “Hey, can we do New York and London?”

Well, look, I think in some regards, some of the biggest UK companies already do that. They do a primary listing here and then they do an ADR into the US. The GSKs of the world do all of that, and that is absolutely fine.

But I think we also have to think about Arm as a really good example. When Arm came back to the market, it IPOed at about $52 billion and went up in the first year to $150 billion. Now, that was an awful lot of the AI trade, which I’m utterly convinced would have happened in London as much as it happened anywhere else. I don’t think—you can’t prove a negative—but I think it’s a falsity to say a London market wouldn’t have valued that the same way.

In the first period of time after it listed, only 1% of the investor base in Arm, which is a great British company based in Cambridge and coming out of our ecosystem, was owned by UK investors. Not one of our major pension funds had it as one of their major investments, and retail couldn’t buy it because of the structure of the way it was done.

Okay. So, if we say we’re indifferent to where a company lists, we’re basically indifferent to the UK investor being exposed to the upside of the value that UK-based companies can generate.

That can’t be right. We tend to think of these things as an asset on one side and as a liability on the other side or something like that, when actually it’s a risk-capital flywheel. It’s how we have the right volume of risk capital going into great companies that produce R&D, produce investment, produce jobs, produce growth, produce revenues, and produce dividends that create a great asset people can invest in, that gives them more returns and more safety in their pension, and that ultimately pays tax revenue as well. We’ve lost sight of thinking of it as a flywheel.

Thinking of the flywheel, I’m at the beginning of the flywheel. What concerns me most is that 10 or 15 years ago, whatever it was, when TransferWise, Monzo, and Revolut all started, it was a great place to start a fintech business. The best developers don’t want to build in London anymore. And why would that be?

I think, honestly, they think it’s incredibly regulated. They think there’s a high cost of living. Crime is pretty bad. Honestly, that’s probably the core of it.

Would they want to live in San Francisco on that basis?

No, but they’ll live in other parts of Europe. They’ll live in Dubai. They’ll live in much friendlier tax regimes.

I guess my question to you is: do you see that London’s lost its competitiveness for the best developers or not?

I think there’s a broader point. The FCA made a very overt decision in the teens, or whatever we call it, to create a sandboxing environment for fintechs to be able to start up. The likes of Revolut, Monzo, et cetera, started because the UK created the best possible regulatory environment for them to do so. Now other people have followed it and copied that, absolutely. But that is something we should be really proud of, and that was a conscious choice on the part of our country to do so.

If you then say, okay, the country is now making a really conscious choice to make sure that we’ve got the best possible funding continuum for people to get access to capital to be able to start, grow, scale, and stay here, and make sure that we’re incentivizing our institutional money to invest in that part of the ecosystem as well, then we’ve got a pretty good track record of doing it already.

The conversation that is going on at the moment about regulation is about outcomes-based regulation that is less checkboxy and gets the balance right in terms of the right kind of protections, but the right kind of enabling of innovation and growth. If we want to create UK-based companies, then that’s the right ecosystem to shift to.

I think that’s the conversation that’s happening right now in terms of a risk-on mindset within pension funds. What is the thing that actually really enables that? It’s saying, hey, you have to have 5% in private companies in the UK and around the world. That is the rule that will enable that.

I think it’s going to be a combination of things. I think the fundamental thing is returns. So, if you look at, say, the performance of Canadian and Australian pension funds, they tend to pay higher fees than the fees that are being paid by UK pension funds, but they make higher real returns. Their net return is higher, and the compounding value of higher real returns to the individual pensioner is huge.

A 1% increase in real returns every year—just think about it—it’s eye-watering that we weren’t having this conversation sooner as a country. Some of the things that we had done were perverse. We basically created a world where cheap was good for financial services. I know it’s a bad way of thinking about it, but if I was ever charged with a crime I didn’t commit, I wouldn’t want a cheap lawyer defending me.

We created this idea that, for retail consumers of financial services, you wanted a cheap product, and that’s not the right way to think about it. In a value-added industry, you want to incentivize people to continue to add value, and that produces the best possible product. That’s the model that’s used around the world.

The Canadian pension funds and the Australian pension funds employ very good fund managers, do so on a big aggregated basis, and pay fees to originate complex alternative assets and private companies. So, it’s 5% plus, a movement away from cost to incentive-based profit, and consolidation so that you can do it, because you don’t invest in 1 private company. You invest—I mean, you’ve seen how it’s done—you invest in a portfolio of companies. Some of them will pay off, some of them won’t. It’s got a different failure rate from what would happen in the public markets, and therefore you need a bigger, consolidated way of looking at that.

Is scale important?

Scale is important. Yeah, yeah. And so that’s why the UK is doing what it’s doing right now. It’s consolidating its funds together, changing the evaluation of cost-benefit in terms of net return, and looking at how we also think about incentivizing investment in the UK.

We used to have tax breaks to invest in the UK. We took them all away and then wondered why people didn’t invest as much in the UK. Other countries do.

You said about a movement away from cost and being overly worried to pay, bluntly, for quality, despite the fact that it does much better. You said before that UK CEOs are paid too little by international standards. I completely agree. I think it’s a joke that we chastise CEOs for being paid what they’re paid, actually, when they run multi-hundred-million-dollar companies. Talk to me about your thinking around that, and do you think the UK gets it yet?

It’s changing quite radically.

It is. Yeah, yeah, it really is.

I think it just needed—again, I always talk about these things—you go around the other side of the problem and just look at it from a different angle sometimes.

For various cultural reasons, as much as anything else, a lot of this was market practice; it wasn’t actually the rules. We had this perception that we needed to constrain and really zero in on focusing on what, to be honest, usually 2 people get paid, which is the 2 executive directors on the board. So, you have 40 pages of disclosure about what 2 people get paid.

Okay.

But essentially, the way we’ve reframed it as the Capital Markets Industry Taskforce is: let’s just have a big-tent conversation about what we mean here.

If we're trying to constrain what the leaders and senior executives in our largest listed companies get paid, we're potentially undermining what the UK has been doing for years: creating globally consequential companies from the UK. If, in order to break into, say, that market in Asia or that market in the US for your product, the going rate for that person is more than the asset manager is allowing you to pay your CEO, then, by definition, arguably, the buy side is saying, “I don't want you to be globally consequential.”

Actually, I don't think that's what they're saying. I don't think that was what they ever intended to say. I think it is a little bit of saying, “Okay, we don't want to go down the sort of Elon Musk pay-packet kind of route, but we do want to make sure we are creating a competitive environment for the best possible people to be leading our institutions.”

There's a right balance between incentivizing people to deliver that value and recognizing that things are very aligned. So many things in life are more aligned than oppositional than people realize, but if you're a long-only investor in a company, you want its long-term value creation, in the same way that, if you're the executive of the company, you do too. If you think about a private company, you've got VCs and PEs sitting on your board, coaching CEOs as to how to succeed. Everybody's got the same liquidity risk profile. They want the same thing. The idea that suddenly you get to the public markets and those interests aren't aligned is a bit of a perversity.

Do you think Wise have done better being in the UK than they would have done if they were in the US?

Look, the risk for a company of that size, given the profile of its businesses, is that it gets lost. They've got a pretty healthy following here and are well understood and well recognized as a brand. I think their logic was, “Okay, we're incredibly proud of what we've done. We're going to stand on our own recognizance in terms of being able to market ourselves to our investors. We're going to get the market to identify the price.” They got an incredibly good price.

Do you think it's a good marketing message to say to CEOs, “Hey, be a big fish in a small pond”?

I think it's a big fish in a big pond. Look, I mean, we are the second-largest equity capital market in the world in a free-market economy. That's the thing that gets lost.

If you want to be able to only guarantee your indexation and therefore your support from 60% of the investor base, if you decide to redomicile or relocate to the US and substantially all your operations are there, then the US market may be right for you. The UK allows you to have all the indexation, all the access to the investors, and a higher liquidity, actually turnover rate, for your shares available. You can stay in the UK if that's where you come from, or if you're an international company, you can get access to those things without having to redomicile.

The US market basically has some pretty strict demands on companies and increasingly incentivizes them to move into the US, to become a US company, if they want to get the true benefit of being in the US market.

Do you think there should be a unified EU market?

Look, we're the UK market, so it's not for us to judge or tell the EU what it should do. I think what we're seeking to be—and we are, and we have been every year for the last decade—the largest equity capital market in Europe. There may have been a certain amount of flow back to Europe post-Brexit in terms of activity.

Increasingly, particularly now that our rules have changed, what we're seeing is that even European companies are looking at London and saying, “Actually, we're going to use London.”

So Brexit didn't irreparably damage London?

No, it had natural consequences, which I think you can't deny.

Brexit hurt or helped the UK markets in the long term?

I think making sure that, when you have to rely on your own recognizance, as it were, because the City got bigger every year because the single market got bigger, you're actually going, “Okay, what is our job, both to drive our place as a global financial center and to drive the UK economy? Are we properly structured to do that?” I think it forced us to have that conversation in a way that we might not have had as thoroughly otherwise.

We have always had a globally significant capital market, and this is the thing that is sort of forgotten. For most of the first few weeks of January, we were the largest equity capital market in the world by capital raised, ahead of Nasdaq. As of today, if you take the 2024–25 numbers by total capital raised, the only equity capital markets in the world that are bigger than us are the US and India. Everywhere else is behind us.

We're the only European market in the top 10, and we raised more equity capital last year than the next 3 European venues combined. We forget that as a nation. We fixate constantly on the US. Yes, the US is a huge capital market, but if you want great companies to be able to start here, grow here, scale here, and stay here, if you want UK investors to have access to the best possible fast-growing assets that give them the right returns, that mean that they have good pension returns but also invest in their economy so that their kids have got good jobs and their kids have got futures, then you need to have a vibrant capital market.

How do we get rid of stamp duty?

I'm working on it. I think you start tapering it. One of the things that we've been looking at is if the UK can encourage and provide incentives—and that's a lot of the discussion at the moment—to make sure that our pension funds are incentivized to invest in the UK, which is what we used to do when we had dividend tax credits.

We give people tax breaks to keep their money in cash in the UK in the form of 100% cash ISAs. Now, cash is very important for people who need a safety net and to be encouraged to save, but it doesn't need to be 100% of everybody's total lifetime allowance. If you did those 2 things, you'd see a potentially pretty significant increase in the amount of flows already into UK equities, which would increase the government's revenue from stamp duty.

That would then mean that you could start tapering it around, for example, retail tickets under a certain size, to just reincentivize retail participation in our market and get rid of the friction associated with it, and then start tapering it from there.

You're not going to be able to go, “Please, can I just take £4 billion out of the Exchequer?” In a world where the Chancellor has got the disciplines that she's got around the OBR, you can't do that. You can't just say, “Get rid of it.” You've got to come up with a mechanism whereby, net-net, it works over time.

I think there's a pretty compelling reason for how to do it, and I think everybody understands the pernicious nature of it now. I think it's just that it's not about the City saying, “Just get rid of it,” without thinking about the consequences for the politicians who've got to make those choices. It's about finding the best possible way for them to be able to do it in a way that operates within the constraints that they're operating to.

You said before—I can't remember where exactly it was—that we have to be young, scrappy, hungry. It was a quote from Hamilton. If you could do anything without fear of repercussion or structure or decision-making from teams or anyone else, what would you do to enable progress, growth, and innovation?

If I had a magic wand, I always describe this as sort of the DeLorean package, without the bankrupt Northern Irish car company. In other words, it's Back to the Future.

We used to back ourselves as a nation. We used to have structures and tax incentives to invest in the UK. At that point, we had some of the highest investment rates, highest growth rates, and the largest capital market in the world. We gradually took those incentives away and then assumed everybody else would invest in us if we weren't investing in ourselves.

To me, it's about a proper conversation as a country about how we take these enormous pools of capital that we actually have and are reincentivized to invest in ourselves. I think that becomes a virtuous circle very quickly, and once you start getting into the habit of it, it will be maintained. I think that's one thing: basically making sure that we incentivize domestic flows of capital.

But the other thing is the culture, and that's the glove and the five fingers in the glove. It's how we talk about it around here, how we celebrate entrepreneurship, how we recognize people like you and what you've done and what you've built, and that there's something remarkable about a founder's journey. We should be really proud of how many of them we have in this country.

I always jokingly say that an awful lot of the founders I meet have put their money, their mortgage, and often their marriage on the line to create great companies. We should be celebrating that: the people who are prepared to work as hard as they do to create that value, and be as driven and visionary for a version of the world that doesn't exist yet, which is what they're creating.

Great scientific breakthroughs come because people sit in a lab and envisage a world that doesn't exist yet. Companies like Revolut exist because Nick sat there and envisaged a way of providing financial services that, at the time, didn't exist. That is the thing that changes society, creates efficiencies, improves people's lives, solves problems, creates value, pays taxes, pays for the NHS, and pays for our defense.

We just need to get better at celebrating it. We have this habit of talking ourselves down as a nation. There was this great life sciences investor who I quoted recently in a speech I gave, who came to do something at the Exchange. He was American and moved over to the UK because of the fundamental science being done here that he wanted to back, and he basically said, “I’ve realized the Americans are perceived to be incredibly naive on the surface, but we’re incredibly cynical underneath. You Brits are incredibly cynical on the surface, and you can finish it with me, but actually I’ve realized you’re quite naive underneath.”

What I was saying in my speech was, I think we can be cynically naive, or even naively cynical, in that we forget the damage of talking ourselves down and not celebrating what we’re good at as a nation. It wouldn’t occur to an American founder not to be singing from the balcony. We need to find our inner channeling of that growth mindset and that optimism. It isn’t that we don’t have it; it’s that we have a sort of culture that doesn’t allow us to recognize it.

If I had a magic wand to say, “Yeah, we could all as a nation just face the day with optimism and the belief that if we rub the right brain cells together, we’re going to come to the right answer,” then that’s probably the magic wand I want to wave.

There are 2 elements before I do a quickfire. The first is, you mentioned Nick. It might be a horrible one to ask, but if you could say to Nick, “You should list in London because of this sentence,” what would it be?

The honest answer is, when you look at the side-by-side of what London offers versus the US, it’s at least as compelling.

Do you not think they’re at the scale where they do get into the top echelons of US markets? There was no guarantee they’d get indexation. They’d walk straight into the FTSE 100 here. You can still access US investors afterwards. Do you think you’ll get them?

Look, every company has to make a sovereign decision. The only thing I can do—and that’s where the “young, scrappy, and hungry” comes from—is fight for every listing where we think we’ve got a compelling argument. That’s where the “young, scrappy, and hungry” statement came from.

The final one: you said something about the sexiness of the US. Is there anything that we can learn from the US in terms of how they present themselves and the product that they sell to be more sexy?

Yeah, it’s an interesting question. It’s a really interesting tension. Some of the things that are special about the City are that we have been doing the same thing for hundreds and hundreds of years, actually, and it’s part of our strength. Some of our longevity at doing these great things as a nation and as a city are things that we should celebrate.

That’s why I describe what I run as a 300-year-old fintech. Both statements are true. We’ve existed for 300 years. What we do in terms of purpose is the same today as it was 300 years ago. I describe our job as a convenor: to bring together those who have capital with those who need capital, in service of an objective.

The way we do it technologically has transformed, even from how we did it 10 years ago, let alone how we did it 30 years ago or 40 years ago. The technology that we use is some of the most cutting-edge technology in the world, and I run a tech company. People don’t think of me that way, but that’s what I do.

Some of it is just about how we explain ourselves, talk about ourselves, and then add more celebration to the success of the companies that list on our market. We need to make sure that they’re more visible and make sure that people go, “Yeah, that’s where I want to be.” That’s the thing that we’re seeking to do. We’ve done a lot over the course of the last few years to change that, but there’s more that we can do.

Right, I want to do a quickfire, otherwise I’ll talk to you all day.

Okay.

What do you believe that most people around you disbelieve?

I always believe that any problem is fixable. I guess the right way of thinking about it is that my basic philosophy is, if you don’t like the system, change the system. An awful lot of people in this city don’t think they can change the system.

What do you know now that you wish you’d known when you accepted the role?

It isn’t possible to operate on 4 hours of sleep for very long. I wish I had a magic machine that would give me 48 hours in a day and still enough time to sleep, I think.

What do you not do now that you would do if you had more time?

Spend more time with my family.

Yeah.

Mum, don’t watch this.

Yeah. Yeah.

What have you changed your mind on in the last 12 months?

Lots of things. I always have this phrase: I don’t need to be right; I need us to get to the right answer. So the question is, how do you create that group of people around you where you know the objective you’re trying to achieve, and then you all co-curate how to get there?

You’ve got people in the room who are going to poke you and prod you and go, “Ah, but have you thought about that? And have you thought about that?” And actually, “Julia, no, I know you’ve been hooked on this, but here’s a problem with it. How about we think about it that way?”

So I’ll have my mind changed every day. That’s what it should be. The most important thing is to make the best possible decision you can in the moment with the information that you’ve got, recognizing that as you get more information, you need to evolve what you think.

The things that I thought, probably in the reform agenda, were the most important things to focus on have either become less important or they’ve been fixed, and other things have become more important.

If you were to sit down with Rachel Reeves and advise her on 1 thing, what would you say?

Pension fund reform. Turn the taps on.

Do you think she’s listening?

I think the government has very clearly prioritized looking at pensions and looking at domestic flows of capital, and they’re right.

Is ESG box-ticking and BSR a problem? I had a show with Grant Shapps, former defense minister, who said that it was immoral because it prevented large amounts of capital from flowing into certain assets.

Here’s the thing: a focus on the climate impact of companies is not wrong. If you think about an existential threat to multiple generations from what is happening to our planet, then it is a wholly legitimate thing to take into account in the consideration of value.

However, how you do that so that you actually take it into account for the right reasons and drive investment into the things that you need as an economy—to continue to grow, to create the right living standards for people, and to finance the transition—is a different exercise.

There have been places where overregulating these things has actually produced perverse outcomes, where investors are incentivized to invest in big extractive industries, for example, rather than medium-sized, scaling green economy companies, because one can produce the data and the other can’t.

I don’t think the fundamental regard for the impact of a company on climate change, and how it is going to mitigate its pathway through the changing climate for the benefit of its long-term stakeholders, is wrong at all. Having a prescriptive view as to how that should be done doesn’t allow for innovation or learning.

The way I would frame it is: if getting to net zero was easy, we’d have done it already. We’re going to have to learn and fail and learn again and fail, and hopefully do so as fast as we can, in order to manage climate change.

Therefore, we need to create space for that innovation to happen and incentives for that to happen. Sometimes regulating it can run afoul of the need to create that space to innovate.

What concerns you most in the world today?

This conversation alone illustrates that things aren’t binary. Things are complicated. There are lots of shades of gray. We don’t create much space to have those truly fundamental conversations about those shades of gray.

We create a lot of space to say, “Well, I’m on this side of the argument and you’re on that side of the argument. I’m going to shoot my metaphorical arrows at you.”

How we find the space to actually have the nuanced understanding about how you balance, for example, the cost of transition to net zero, the consequences of doing so, and the demands it’s going to place on people—recognizing that it’s not all binary, but has been constructed as such, and that there are trade-offs that society needs to agree on—we need to find spaces to have those conversations.

Algorithms drive content today.

They drive content. They do, and they take people to the places they already are.

They take people to places, but also nuance doesn’t drive hits. No one cares about bad headlines.

Bad headlines drive clicks.

Sure. Totally. Well, not even bad headlines—opinions drive clicks.

And so it depends, and it’s really nuance that—

Take it out. Boring.

Yep, I know. Cut to the first bit.

Unfortunately, the world is not as binary as everybody constructs. And the real value is in mapping your way through the nuance. And so I do worry that we don't create the space.

What seemed black and white when you were younger that, now with wisdom and experience, you’re like, “No, no, no—probably most things”?

I mean, I think it’s very easy to think of it that way, and I think—I don’t know. The older I’ve got, the more I’ve realized things aren’t binary. I always jokingly say I see very few things in life as binary, including football matches, which, as a fan of Manchester United, has been quite convenient recently.

I can see the benefits of most things on both sides. I also think that we treat things as oppositional when they're not, too much of the time. We decide, well, there's one side or the other side. And when I'm in meetings, very often my team will go, “Well, there's this option or there's this option,” and then they'll wait, and I go, “How about the one in the middle?”

Usually, there's one in between the two because they've been constructed as either-or, when in fact there's actually something that can make most people happy and solve most of the problems. You might, at the margin, have a small number of things that you've not resolved.

Final one: LSE in 2035. Where is the LSE then?

Well, I hope we've proven our point as the leading international exchange that is genuinely the default choice for great UK companies that have built to a really significant scale because they have had domestic capital driving their financing as they've started, as they've grown, and as they've scaled. That's the vision.

Julia, thank you so much for having us in the office. Thank you so much for being so open, and I've really enjoyed it.

Pleasure. Me too.