UK taxpayers ‘subsidising’ S&P 500, says LSEG boss

Tax breaks should be used to encourage domestic investment in public markets, the London Stock Exchange Group’s (LSEG.L) chief executive has said.

Westminster is seeking to reform pension rules to encourage large pools of capital to invest in domestic equities. Chancellor Rachel Reeves has sought to force pension funds to invest in UK companies, as a means to stimulate economic growth, in a contentious move toward mandation.

“We’re not advocating for a mandate,” David Schwimmer, CEO of the London Stock Exchange Group (LSEG.L), said in an interview with Yahoo Finance UK's Market Sunrise show.

He explained that UK pension funds have historically decreased their allocations to UK-listed assets “dramatically”, from over 40% to just 4% over the past 25 years. Schwimmer argued that pension funds should allocate a minimum percentage of their investments back into UK markets, particularly given the tax benefits they receive.

“The issue is that the pension funds get £49bn a year in tax benefits from the government, from UK taxpayers,” Schwimmer said. “If they are getting those tax benefits and then they're investing in US equities, you basically have the UK taxpayer subsidising the cost of capital in, I'll say, the S&P 500 (^GSPC), which doesn't make a ton of sense from a policy perspective.”

While Schwimmer did not advocate for a mandate, he suggested that “it's reasonable to have those tax benefits that the pension funds are currently getting be conditional on some kind of minimal threshold investment in the domestic background. I'll throw out 10% but I'll let the policy experts figure out what the right number is.”

Earlier this year, Reeves had suggested the introduction of a “backstop” power that would compel pension funds to invest in British assets if necessary. Her proposals gained some traction, with 17 pension funds agreeing under the Mansion House Accord to allocate at least 5% of their assets to the UK by 2030. This commitment includes giving the government the power to enforce domestic investment in the event that voluntary contributions fall short.

The reforms will form part of the Pension Schemes Bill, which is about to go before parliament.

The new approach would mean over £50bn of additional investment in UK infrastructure, new homes and businesses, the Treasury said.

The UK’s declining IPO activity has been a persistent issue, with the number of listings at the London Stock Exchange falling to a 30-year low. But Schwimmer acknowledged that the broader global trend has seen a dip in listings, especially with the rise of private capital.

“The number of listings on a global basis has declined. In New York, for example, the number of listings is down by 40% over the last 10 years or so,” he added.

The UK has been working to reform its listings regime to make the market more attractive. “If you go back a few years, there were some rules that were probably overly conservative and hadn't really moved along with how markets were operating around the world,” Schwimmer said, referring to changes like the acceptance of dual-class share structures and the loosening of free float requirements for new listings.

“All these different aspects have been viewed as very attractive and helpful, so we are now actually seeing a growing pipeline and an increasing number of companies looking to list here,” he added.

Despite these efforts, Schwimmer admitted that the UK market still faces intense competition from other exchanges, particularly New York, which has seen a resurgence in listings in 2025.

Schwimmer was quick to point out, however, that not all companies are suited for the US market. “There are many companies where it does not make sense to list or go to New York,” he said. “In the past 10 years, 20 companies or so have gone from the UK and listed in New York and raised over $100m. Of that 20, three of them have their stock trading up. Of the rest, I think eight of them have delisted, and the remainder are trading down like 70% or so.”

He also pointed out that many companies, particularly smaller ones, benefit from the personalised attention they receive in London in contrast to the more crowded US market.

“They don’t get the right attention from investors, from research analysts.” For these companies, Schwimmer argued, “it makes much more sense to be listed and trading in the UK.”

Despite the challenges facing the UK market, Schwimmer remains confident in London’s long-term position as a global financial hub. While the number of listings may be down, the capital’s strength lies in its international appeal.

“London is by far the leading stock exchange in Europe, and it is also the most international financial centre, attracting capital from the UK, US, EU, the Middle East and Asia,” Schwimmer said.

He acknowledged that New York’s appeal cannot be dismissed but argued that for many companies, London is “absolutely” is better.

London Stock Exchange is exploring the idea of 24-hour trading, LSEG's chief executive said. · Jeff Moore – PA Images via Getty Images

When asked about the potential for 24-hour trading at the London Stock Exchange, Schwimmer said that while nothing has been decided yet, LSEG is actively exploring the idea.

“We are looking at whether we should be changing our hours. We haven't made any decisions, and anything that we would do would happen in consultation with the market, our users, and of course, we would work closely with the regulators,” he said. “Nothing has been decided at this point, but it's something we are certainly thinking about.”

This would require navigating some challenges, including technological upgrades, regulatory considerations, and potential impacts on liquidity and dual-listed companies.

While cryptocurrencies such as bitcoin (BTC-USD) already trade 24/7 and more investors are turning to platforms such as Robinhood (HOOD) to trade shares after hours, stocks listed on the London Stock Exchange remain confined to traditional UK trading hours, running from 8am to 4:30pm.

Globally, other exchanges are also eyeing extended hours. In late 2023, the New York Stock Exchange proposed a shift, requesting US regulators to expand its trading window from the current 9:30am–4pm schedule to a new span of 1:30am–11:30pm.

However, such changes come with concerns. Critics, including some brokers, warn that extended hours could complicate the clearing process and require significant operational shifts. Additionally, open-ended fund managers, who calculate daily values at market close, could face challenges with pricing and liquidity in a round-the-clock trading environment.

The London Stock Exchange Group has diversified over the years, with its data and analytics business now comprising the bulk of its revenues. The company’s strategic pivot into financial data services, which involves providing access to market information for a wide range of clients, including banks, brokers, and asset managers, has positioned it as a key player in the financial data sector. This transformation was bolstered following LSEG’s $27bn acquisition of Refinitiv, the financial data provider, in 2019.

Schwimmer also discussed the growing role of AI at LSEG, highlighting that AI is already a major part of the company’s operations.

“AI is already playing a significant role in our business, both internally and externally,” he said, adding that internally, AI is being used to increase efficiency, streamline operations, and improve data ingestion.

The CEO highlighted a partnership with Microsoft (MSFT), which took a stake in LSEG a few years ago. “We’ve been collaborating with Microsoft to make our products interoperable with the Microsoft productivity suite, including tools like Excel and PowerPoint. This allows bankers and other financial users to use basically modelling, which, if you're in that space, is incredibly helpful and useful,” Schwimmer explained.

Revenues at LSEG rose 7.8% to £4.49bn in the first six months of the year, exceeding analysts’ expectations. The company made just £205m from its equities division over the same period, or 4.6% of its overall revenues. LSEG also announced a £1bn share buyback.

Read more:

Download the Yahoo Finance app, available for Apple and Android.