City veteran Richard Buxton: The stock market is past its prime

London’s stock market is past its prime and urgently needs reform to return to its former glory, a City veteran has warned.

Richard Buxton, who retired this week after a decade-long career including at Jupiter Fund Management and Schroders, said yesterday the London Stock Exchange’s demise was “the tragedy of his career”.

He said pension funds and insurers were being forced to invest in “seemingly safe fixed income investments” rather than the stock market because they believed stocks were risky because they were volatile. But he added that “for a long-term saver, daily volatility and indeed daily liquidity are completely irrelevant.”

Buxton blamed this arrangement for making the City of London a less attractive location for companies wanting to go public and supported government attempts to revitalize the stock market.

Chip designer Arm has announced it will be going public in New York this year to secure a higher valuation – a blow to London.

Warning: Richard Buxton said the collapse of the London Stock Exchange was “the tragedy of his career”.

The latest data from auditor EY showed that the number of IPOs in London fell sharply in the first months of 2023 compared to the previous two years.

There were two floats on the main market between January and March this year, raising a total of £63m. However, there were twelve new listings on London’s main market in the same period of 2022 and 2021.

“Right now, companies are clearly choosing to list in New York because they have a liquid, equity-oriented savings culture that we have since abandoned,” Buxton told the BBC.

“Obviously if you can revive that, companies will come back and be interested in listing in London if the appetite is there.”

He pointed to some sectors that he believes will be big growth areas in the UK, including those linked to the energy transition, IT, healthcare and life sciences.