City sends an SOS to fix London markets ‘before it’s too late’

Fears over the health of the City’s stock market have been laid bare after trading platform IG became the latest firm to sound the alarm over the “crisis unfolding” on the London bourse.

The FTSE 250 firm has launched a “Save our Stock market” initiative – aptly dubbed the SOS campaign – which serves as an “urgent rallying cry to policymakers” to reverse the market’s decline.

“Our stock market – once the envy of the world – is in a downward spiral,” said Michael Healey, UK managing director at IG.

The demands to increase capital flows include scrapping the stamp duty on shares, which IG labeled a “self-inflicted wound” that “unfairly penalises UK investors”.

The 0.5 per tax levy slapped on UK share purchases has consistently been named as one of the City’s biggest gripes. But new figures revealed government tax receipts from the shares levy grew 27 per cent year-on-year to £4.4bn leading to elevated concerns investors would continue to be viewed as a chunky source of revenue.

The fresh calls to scrap the tax follow Steven Fine, chief executive of Peel Hunt, telling City AM the move would help “shift this doomloop of negativity that seems to pervade the country.”

Fine said: “There are a lot of levers at our disposal that we could pull that either wouldn’t cost the exchequer a bean or could significantly move the dial on the mindset of people you want to commit to growth in the UK.”

Susannah Streeter, head of money and markets at Hargreaves Lansdown, told City AM ditching stamp duty would bring the UK “into line with other jurisdictions and potentially persuade more companies to stay listed in London”.

Boosting retail investment has also been named as a target by IG, as the firm called for 20 per cent income tax relief on ISA shares for at least three years in a bid to increase market activity. The campaign also calls on regulators to clarify the difference between advice and guidance “so that financial services providers can promote long-term investing benefits without regulatory uncertainty.”

Firms ditch UK for deeper capital

The London Stock Exchange has endured a bruising few years with 88 firms delisting or transferring their primary listing in 2024. This marked the biggest exodus since the financial crisis and included the likes of Paddy Power owner Flutter and tech darling Darktrace.

The lack of liquidity has been cited by firms exiting the UK, including fintech darling Wise which transferred its primary listing to the US this month as it sought a deeper pool of capital.

More recently, foreign takeovers have swept the market as overseas giants preyed on British bargains. This included a trio of tech takeovers, all within the span of 24 hours, earlier this month, that will represent a combined £6.3bn in M&A transactions.

The chief executive of London-listed Liontrust raised concerns over the lack of influence UK investors have in stock valuation after the asset manager recorded a 28 per cent hit to profit on Wednesday.

“Domestically, we are four per cent of our own market,” John Ions told City AM, “if you look around the world it’s woefully inadequate.

“We are very much a price taker.”

The firm battled with nearly £5bn in outflows over the financial year ending March 2025 as investors pulled from funds, primarily in retail.

Streeter added: “The lower liquidity of the London Stock Exchange is increasingly hampering its ability to hang onto listings. The bright lights of New York, with its hefty valuations and super-star tech giants are a big draw.”