The London Stock Exchange is looking at a ‘hybrid’ trading model to give private companies a stepping stone into the market: report

A reception desk at London Stock Exchange on August 29, 2019 in London, England

 LSE would be the first exchange to give private companies access to trade shares on public markets.

The proposals are part of a plan to attract more tech companies, according to a report by the Wall Street Journal.

Start-ups as well as large companies would be able to sell shares to retail and institutional investors under this model.

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The London Stock Exchange Group has proposed a special market for private companies to trade shares in public markets, according to a report by the Wall Street Journal.

This is part of a plan to attract more tech firms to post-Brexit London. Tech startups, as well as large companies, would be able to sell shares to retail and institutional investors. The LSE mentioned fintech companies like Revolut and Klarna that could have potentially benefitted from these proposals.

The proposals would give private companies access to public markets on certain days to trade shares. Private companies would be able to publicly trade shares between one and five days in each trading window, once a month or quarter, or every six months according to the report.

Private companies would be able to carry out private share transactions during those public trading periods, as well as share inside information with stakeholders without disclosing it publicly. 

Before the public trading periods, the private companies would need to give a “cleansing statement” disclosing material information, the LSE said.

“The new venue type would act as a stepping-stone between private and fully public markets,” the LSE wrote in a document sent to the FCA and the Treasury, as reported by the WSJ.

These private companies would not face the level of regulatory oversight fully-listed companies face. 

The LSE called the plan “MTF-lite,” after an industry name for a financial market known as a multilateral trading facility.  

In a statement to Business Insider, an LSE spokesperson said, “LSEG works closely with government, regulators, and stakeholders on a wide range of issues.”

“LSEG agree there is potential for additional routes to market to support the widest range of companies through their funding lifecycle including helping them transition from the private to the public markets and indeed back again. We will continue to support the innovation of the UK as a global financial center,” the spokesperson added.

The UK is trying to maintain its footing as a global financial hub following its full exit from the European Union in January 2020. The UK revised its stock listing rules last year to attract more tech firms and SPACs to London. 

2021 was a strong year of IPOs in the UK, according to the LSE. More than 120 companies listed on the London Stock Exchange and raised £16.8bn, the group said. This was the strongest year for IPO capital raising since 2007 and the highest number of IPOs since 2014, it added.

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Markets, MI Exclusive, Markets, London Stock Exchange, London Stock Exhange Group, Listing, Private Companies, Public Companies, Hybrid, Proposals, Trading

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