WEBVTT - LSE Chief Julia Hoggett on CEO Pay, Overdue Optimism and Listing Reforms 0:00:00.920 --> 0:00:02.080 Dave, we have good news. 0:00:02.120 --> 0:00:06.080 Listen to this Bloomberg headline from the weekend. UK's unpopular 0:00:06.160 --> 0:00:07.760 market is suddenly the place to be. 0:00:07.960 --> 0:00:08.360 Wow. 0:00:08.480 --> 0:00:13.920 I mean, finally, finally, some good news out of Britain. 0:00:14.840 --> 0:00:18.680 You know, never mind the economy, never mind listings going elsewhere, 0:00:18.840 --> 0:00:20.720 never mind political chaos. 0:00:21.079 --> 0:00:22.360 Turns out Britain's the place to be. 0:00:22.840 --> 0:00:24.239 Yeah. So that's a positive spin. 0:00:24.280 --> 0:00:26.480 I mean the negative spin would be well, we couldn't 0:00:26.480 --> 0:00:29.000 have fallen much further at the bottom, but we do 0:00:29.120 --> 0:00:32.760 have strategist from Barclay's, HSBC, Goldman Sachs and JP Morgan 0:00:32.920 --> 0:00:34.920 all saying positive things about the UK market. 0:00:36.360 --> 0:00:39.319 I'm Francis Laqua and I'm David Merritt. Welcome to In the. 0:00:39.280 --> 0:00:42.479 City, Bloomberg's podcast connecting you to the conversations at the 0:00:42.479 --> 0:00:43.559 heart of the City of London. 0:00:43.680 --> 0:00:46.760 This week we speak with London Stock Exchange Chief Executive 0:00:47.120 --> 0:00:50.680 Julia Hoggart for a deep look at the UK equity market. 0:00:50.800 --> 0:00:52.920 And we get her take on whether, after all the 0:00:52.960 --> 0:00:58.600 negative headlines, things are finally starting to look up. Julia Hoggett, 0:00:58.600 --> 0:01:01.240 thank you so much for joining. Yes, there has been 0:01:01.360 --> 0:01:04.399 so much negative headlines about the UK and what it 0:01:04.440 --> 0:01:07.200 means for the LC and also tracting investments. Were we 0:01:07.319 --> 0:01:08.600 finally turning a corner? 0:01:08.959 --> 0:01:11.360 I actually think we've been turning a corner in real 0:01:11.400 --> 0:01:13.360 life for quite a long time. I think it always 0:01:13.400 --> 0:01:17.400 takes time for fact, narrative, and indeed perception to all 0:01:17.440 --> 0:01:19.800 catch up with one another. But I think there is 0:01:19.840 --> 0:01:22.120 a great deal of reason to be hugely optimistic. 0:01:22.360 --> 0:01:23.800 So what are the selling points? 0:01:23.920 --> 0:01:24.880 So I think if you. 0:01:24.920 --> 0:01:28.120 Take a look at London, it already is a dominant 0:01:28.160 --> 0:01:30.199 capital raising center, and it has a lot of strengths 0:01:30.200 --> 0:01:32.920 which are innate to London by any measure, with the 0:01:33.000 --> 0:01:35.679 largest capital raising venue in Europe, and we have an 0:01:35.720 --> 0:01:41.000 incredibly international investor base who understand both domestic and international stories. 0:01:41.319 --> 0:01:44.679 We have a huge amount of capital that tracks the 0:01:44.720 --> 0:01:47.440 foot seat and tracks the assets which are within it, 0:01:47.520 --> 0:01:51.320 and therefore there is a structural supporting bid behind it. 0:01:51.320 --> 0:01:54.360 It is one of the largest pools of dedicated AUM. 0:01:53.920 --> 0:01:55.400 In Europe, if not the largest. 0:01:55.560 --> 0:01:59.040 And one of the other facets is that London actually 0:01:59.120 --> 0:02:03.680 enables company of a certain scale to get the visibility 0:02:04.040 --> 0:02:07.320 and the attention that they need. The US is dominated 0:02:07.320 --> 0:02:09.840 by some very large companies, but every company has to 0:02:09.880 --> 0:02:12.840 start somewhere and grow and have the capacity to continue 0:02:12.880 --> 0:02:15.239 to grow and get focused as a consequence of being 0:02:15.280 --> 0:02:18.200 on that journey. The other thing I would say, which 0:02:18.240 --> 0:02:20.320 I think is really important. I say this a lot. 0:02:20.360 --> 0:02:22.840 I think I said it to you before, is that 0:02:22.880 --> 0:02:25.399 a listing is for life, not just for Christmas. There's 0:02:25.400 --> 0:02:28.080 an awful lot of focus on that initial IPO, and 0:02:28.080 --> 0:02:30.600 I understand why there is, But actually one of London's 0:02:30.600 --> 0:02:33.280 strength is its ability to have phenomenal amounts of follow 0:02:33.320 --> 0:02:36.960 on capital raising and that ongoing structural support for companies 0:02:37.000 --> 0:02:39.520 once they come to market, which enables them not just 0:02:39.560 --> 0:02:42.240 to have an initial idea, but actually to be able 0:02:42.240 --> 0:02:44.919 to continue to finance their growth as they move through 0:02:44.960 --> 0:02:46.600 the gears of their development. 0:02:47.280 --> 0:02:50.400 Something we tracked extensively on this podcast has been the 0:02:50.480 --> 0:02:53.560 kind of the relative strength of the London market versus 0:02:53.680 --> 0:02:56.080 European and global competitors as well. And there is this 0:02:56.160 --> 0:03:00.720 big moment when the Paris Exchange over to London and 0:03:00.800 --> 0:03:04.840 it felt like this kind of tipping point of London's dominance. 0:03:04.840 --> 0:03:08.000 And now we're approaching party again, maybe London's going to 0:03:08.120 --> 0:03:10.320 edge a bit further. Is that really important to you? 0:03:10.360 --> 0:03:12.320 As the chief preceptive may I be blunt with you. 0:03:12.840 --> 0:03:15.280 I understand that I know that they were Bloomberg's numbers 0:03:15.320 --> 0:03:15.960 to be reported. 0:03:16.360 --> 0:03:18.640 I don't actually recognize those numbers in terms of the 0:03:18.639 --> 0:03:21.240 differential between the size of London and the size of Paris, 0:03:21.800 --> 0:03:24.720 because some of those in its numbers disregard certain elements 0:03:24.720 --> 0:03:27.240 of what is listed in London. And so we are 0:03:27.280 --> 0:03:30.840 still the largest global center by any measure, and I. 0:03:30.760 --> 0:03:33.120 Think it's about two trillion bigger. 0:03:33.160 --> 0:03:37.280 So I think the narrative of Paris overtaking London is 0:03:37.280 --> 0:03:39.400 not something I actually factually recognized. 0:03:39.880 --> 0:03:43.200 Okay, so great, So there's a different way of calculating it. Fine. 0:03:43.640 --> 0:03:49.280 And yet obviously London's relative size has shrunk compared to 0:03:49.440 --> 0:03:51.880 its biggest European competitor in the last few years, hasn't it. 0:03:51.960 --> 0:03:54.560 I mean that trend has been real. Whether or not 0:03:54.720 --> 0:03:57.760 you factor in different I think you. 0:03:57.880 --> 0:04:00.960 Yes, So you will see relatively. 0:04:01.040 --> 0:04:03.880 You see the growth of certain stocks on certain markets 0:04:03.920 --> 0:04:06.480 that have gone up, the. 0:04:06.440 --> 0:04:08.720 Luxury stocks in Europe basically, and. 0:04:09.240 --> 0:04:10.600 Some of that delta shift. 0:04:10.720 --> 0:04:14.120 But our numbers would say that London has got a 0:04:14.240 --> 0:04:17.280 form eight trillion pounds of market cap and Paris it's 0:04:17.279 --> 0:04:21.320 got two point nine trillion market cap, so the delta 0:04:21.360 --> 0:04:23.919 is still pretty significant. The other thing I'd say is 0:04:23.920 --> 0:04:27.279 that London is the only European venue that is in 0:04:27.320 --> 0:04:30.200 the top ten of global exchanges. So I use this 0:04:30.200 --> 0:04:32.840 phrase repeatedly, but by any measure, we are the largest 0:04:32.839 --> 0:04:35.280 market in Europe, and we want to be, and we 0:04:35.320 --> 0:04:37.440 want to continue to be, and we should measure ourselves 0:04:37.480 --> 0:04:40.400 as being. We've actually raised more than the next two 0:04:40.480 --> 0:04:43.400 European venues combined this year so far, year to date, 0:04:43.560 --> 0:04:47.880 and so the measure actually isn't quite the story that's 0:04:47.600 --> 0:04:51.839 been told. My focus is on continuing to grow the 0:04:51.960 --> 0:04:54.599 UK market and addressing some of the things that I 0:04:54.600 --> 0:04:57.279 think we have needed to address for many years in 0:04:57.400 --> 0:05:00.640 terms of the amount of available risk capital is directed 0:05:00.680 --> 0:05:02.720 to our market. So, my viewers, we're in a very 0:05:02.760 --> 0:05:05.360 strong position, but there's a great deal of upside from 0:05:05.360 --> 0:05:08.160 here with a regular, true reform agenda that's going on. 0:05:08.720 --> 0:05:10.680 But Julie, how much of a blow was it for 0:05:10.960 --> 0:05:12.560 London not to get the r IPO. 0:05:13.360 --> 0:05:13.919 It was big. 0:05:14.680 --> 0:05:16.760 I've been very honest about that. I've used the phrase 0:05:16.800 --> 0:05:18.160 I think on your show that I want us to 0:05:18.160 --> 0:05:20.719 be young, scrappy and hungary. We should fight for every 0:05:20.720 --> 0:05:24.040 company that we believe we can provide great financing too, 0:05:24.200 --> 0:05:28.000 and particularly great homegrown UK companies that are world leaders 0:05:28.160 --> 0:05:29.720 are in what they do. And I'm not going to 0:05:29.760 --> 0:05:32.840 make any bones about wanting to fight for those listenings. 0:05:32.920 --> 0:05:35.640 There are hosts of reasons why on went to the US. 0:05:35.760 --> 0:05:38.440 I fervently believe that there's still the potential for to 0:05:38.440 --> 0:05:41.159 come to the UK as well. I also believe they 0:05:41.520 --> 0:05:43.359 got in the US what they would have got in 0:05:43.400 --> 0:05:46.440 Europe or got in the UK. So it is a blow, 0:05:46.440 --> 0:05:49.839 but it's that's no reason, not right, and it's no reason. 0:05:50.080 --> 0:05:51.920 I mean, certainly the last thing we should be doing 0:05:51.960 --> 0:05:52.719 is saying that it's not. 0:05:53.000 --> 0:05:54.760 But is there a perception problem? 0:05:54.839 --> 0:05:56.880 So if you have a big IPO that was also 0:05:56.960 --> 0:05:58.920 meant to kick starts a lot of you know, other 0:05:59.040 --> 0:06:02.400 vcs potentially looking the list and they move elsewhere and 0:06:02.440 --> 0:06:06.280 this was a UK company, does it actually, you know, 0:06:06.400 --> 0:06:09.280 nudge other companies to also list elsewhere And does it 0:06:09.400 --> 0:06:11.200 mean that you need to fight harder in trying to 0:06:11.520 --> 0:06:12.400 gain that business. 0:06:14.200 --> 0:06:16.440 I think the battle for listings of. 0:06:18.040 --> 0:06:23.880 Significant companies or any company is pretty aggressive nowadays, and 0:06:23.960 --> 0:06:26.680 so you have to fight for every listing, and that 0:06:26.680 --> 0:06:28.480 would be the case whether you're Nasdat, whether you're Nicely, 0:06:28.520 --> 0:06:31.000 whether you're London, whether you're Paris with your amster, so 0:06:31.440 --> 0:06:34.080 that that is the nature of the environment. I actually 0:06:34.080 --> 0:06:37.760 think the CEO is I talk to understand the specific circumstances, 0:06:37.880 --> 0:06:42.039 understand the specific dynamics, and also recognize that there are 0:06:43.360 --> 0:06:44.600 upsides to being in London. 0:06:44.760 --> 0:06:46.240 They're upsides to being a New York but there are 0:06:46.240 --> 0:06:47.000 downsides to being New. 0:06:47.000 --> 0:06:49.360 York as well, so they get they get all of that, 0:06:49.480 --> 0:06:51.560 and so it's much more nuanced than that, even though 0:06:51.640 --> 0:06:55.120 I understand the headline that says this therefore means that, 0:06:55.200 --> 0:06:57.720 but actually in individual conversations with companies, I don't think 0:06:57.720 --> 0:06:58.440 it's quite as deep. 0:06:58.960 --> 0:06:59.960 It's quite like that. 0:07:01.120 --> 0:07:03.800 You mentioned too about the regulatory changes coming down the pipe. 0:07:03.839 --> 0:07:05.599 And one of the things again we talked about a 0:07:05.600 --> 0:07:08.719 lot on this podcast is about the appetite for risk 0:07:08.839 --> 0:07:13.480 amongst UK, particularly in institutional investors, and everyone seems to 0:07:13.520 --> 0:07:16.080 acknowledge the need for reform here and on how to 0:07:16.240 --> 0:07:18.920 encourage the big pools of capital to take a bit 0:07:18.960 --> 0:07:22.160 more risk. Where are we on that kind of journey 0:07:22.200 --> 0:07:24.400 and with the regulations, I mean There's been a lot 0:07:24.440 --> 0:07:27.160 written and said about it, but are we actually seeing 0:07:27.400 --> 0:07:31.480 any behavioral change by the big UK institutional investors. 0:07:31.960 --> 0:07:33.920 So I have this phrase five fingers on the glove, 0:07:33.960 --> 0:07:36.960 which is all the component pieces that we as the 0:07:36.960 --> 0:07:40.200 capital markets industry transkforce think need to evolve in order 0:07:40.240 --> 0:07:43.280 to really build on the capital markets we have today 0:07:43.440 --> 0:07:46.760 into one that's even more powerful going forward. And the 0:07:46.800 --> 0:07:49.840 third finger of that five fingers is the availability for 0:07:49.960 --> 0:07:52.640 US capital. So we have the second largest single pool 0:07:52.960 --> 0:07:57.400 of investable investable capital anywhere in the world in the UK, 0:07:57.520 --> 0:08:00.000 and our pension insurance money we have as a content 0:08:00.080 --> 0:08:03.080 coins of various regulatory changes over the years caused a 0:08:03.120 --> 0:08:04.800 great deal of that to be taken out of the 0:08:05.160 --> 0:08:08.440 market and put into fixed income or into other assets, 0:08:08.560 --> 0:08:11.280 and we have also created a narrative around de risking 0:08:11.480 --> 0:08:15.760 those portfolios rather than recognizing, particularly for DC pension funds, 0:08:16.200 --> 0:08:19.000 that it's the largest single investment plot that people have 0:08:19.080 --> 0:08:22.120 in their lives and it needs to be invested in 0:08:22.320 --> 0:08:25.000 risk capital in order to have the capacity to grow 0:08:25.120 --> 0:08:26.840 to the scale that it needs to give people the 0:08:26.880 --> 0:08:29.800 life that they want in retirement. Now that is a 0:08:29.800 --> 0:08:33.160 conversation that is now much more prevalent both sides of 0:08:33.160 --> 0:08:35.880 the aisle from a political point of view, across the city, 0:08:36.520 --> 0:08:39.160 across the regulatory environment as well. Regulated is saying a 0:08:39.200 --> 0:08:41.640 lot of the same things, and we are starting to 0:08:41.720 --> 0:08:44.280 really focus on what are those changes that are necessary, 0:08:44.800 --> 0:08:46.800 particularly in our pension market, to would agree in our 0:08:46.800 --> 0:08:49.960 insurance market, and I think increasingly actually in our retail 0:08:50.000 --> 0:08:54.319 savings market to maximize people's ability to direct risk capital, 0:08:54.880 --> 0:08:56.880 to be honest, into the UK and into the UK 0:08:56.960 --> 0:09:00.280 listed market. With some mansion house reforms announced or already 0:09:00.360 --> 0:09:03.080 there was the mansion House Compact, and I would expect 0:09:03.120 --> 0:09:06.199 to see further reform in the autumn statement coming up. 0:09:06.679 --> 0:09:09.320 And when you talk to both sides of the aisle, 0:09:09.320 --> 0:09:11.480 there's consensus on the need to do this. 0:09:12.120 --> 0:09:13.760 And this is happening around the world as well, as 0:09:13.800 --> 0:09:16.320 I understand. We've looked at the Canadian system, is that 0:09:16.360 --> 0:09:18.199 something that we want to kind of import some of 0:09:18.920 --> 0:09:19.920 some of those regulations. 0:09:20.240 --> 0:09:23.400 Fundamentally, the more companies that you meet and great founders 0:09:23.400 --> 0:09:25.480 that you meet in the UK, you realize the amazing 0:09:25.559 --> 0:09:29.520 number of companies we have here and we actually create 0:09:29.559 --> 0:09:32.640 more unitcorns in the UK than anywhere outside the US. 0:09:33.280 --> 0:09:36.920 China and India. The challenge we have is that from 0:09:37.040 --> 0:09:40.160 A B and C rounds onwards, it's not UK capital 0:09:40.200 --> 0:09:43.080 that's financing those companies. So the punch of funds in 0:09:43.120 --> 0:09:46.400 Canada or Australia, or the VC funds on the West 0:09:46.400 --> 0:09:48.800 coast of the US or setting up in London to 0:09:48.840 --> 0:09:49.840 buy stakes. 0:09:49.480 --> 0:09:50.440 In UK companies. 0:09:51.080 --> 0:09:55.600 In twenty twenty one, one Canadian pension fund invested more 0:09:55.640 --> 0:09:58.440 in a single ticket in a UK private company than 0:09:58.480 --> 0:10:01.240 the entirety of the UK punch funds invested in UK 0:10:01.320 --> 0:10:05.080 private companies in the same year. Now, that illustrates the 0:10:05.120 --> 0:10:07.800 fact that it's not the absence of high quality assets. 0:10:08.320 --> 0:10:11.320 It's the fact that we as an investing market have 0:10:11.400 --> 0:10:13.840 not been focused on what's actually been under our noses. 0:10:14.600 --> 0:10:18.520 And some of that has a regulatory focus on liquidity, 0:10:19.200 --> 0:10:23.800 some of it's been a regulatory focus on cost rather 0:10:23.840 --> 0:10:26.959 than return, and some of it has been sort of 0:10:27.160 --> 0:10:30.640 bits of history. But this is a pivot to say, actually, 0:10:30.679 --> 0:10:34.520 we need to have a mindset of investing across the 0:10:34.559 --> 0:10:37.760 private to public space in the UK to back those 0:10:37.800 --> 0:10:41.600 great companies that we are actually creating rapidly. But then 0:10:41.640 --> 0:10:45.000 we're financing with capital from over seats, But does. 0:10:44.920 --> 0:10:47.280 It really matter where the capital's coming from. So is 0:10:47.320 --> 0:10:49.640 it a problem of scale that you have a British 0:10:49.640 --> 0:10:53.760 company or a British unicorn it gets money from outside investors, 0:10:53.960 --> 0:10:56.160 but it's no longer a UK company, or that they 0:10:56.200 --> 0:10:59.800 don't scale it quick enough like we've seen in Silicon Valley. 0:11:00.400 --> 0:11:03.560 So I think the challenge is that ultimately it does 0:11:03.600 --> 0:11:06.840 matter where a company list, because ultimately where a company 0:11:06.880 --> 0:11:10.080 list creates its lockers, it creates its minded management, it 0:11:10.120 --> 0:11:13.959 creates its headquarters. If companies fundamentally have a huge amount 0:11:13.960 --> 0:11:16.520 of capital that they're taking from overseas, and there is 0:11:16.520 --> 0:11:20.120 an exible push from those vcs or whatever to say, well, 0:11:20.120 --> 0:11:23.640 I'm familiar with NASDAQA, I'm familiar with Singapore, go over there. 0:11:24.200 --> 0:11:28.079 Then the indexation pull for those companies to relocate ultimately 0:11:28.120 --> 0:11:30.199 in order to get the full benefit of access to 0:11:30.280 --> 0:11:33.000 liquidity in that market does run the risk that minded 0:11:33.040 --> 0:11:37.080 management headquarters ip and indeed the high quality jobs actually 0:11:37.200 --> 0:11:40.280 leave the country. And so we do a great job 0:11:40.320 --> 0:11:42.920 in this country of starting great companies getting them to 0:11:42.920 --> 0:11:45.280 a certain scale, but what we actually need to do 0:11:45.320 --> 0:11:47.720 is enable them men to scale from here and have 0:11:47.800 --> 0:11:51.120 access capital it's not saying we don't have international capital, 0:11:51.600 --> 0:11:53.800 is that we actually need to have a reasonable balance 0:11:53.800 --> 0:11:55.480 of our own capital invest in it as well. 0:11:56.240 --> 0:11:59.160 The government has taken steps to make sure that pension 0:11:59.160 --> 0:12:02.480 funds at least put a certain part of their pension 0:12:02.520 --> 0:12:04.160 pot in growth companies. 0:12:04.640 --> 0:12:05.160 Is it enough. 0:12:05.240 --> 0:12:06.880 Do you have a figure of how much is needed 0:12:07.120 --> 0:12:08.079 to make a real difference. 0:12:08.720 --> 0:12:10.840 I think the five percent of the mansion how to 0:12:10.840 --> 0:12:14.400 compact will make aim shift. But I do think we 0:12:14.480 --> 0:12:17.600 need to be focusing on looking at the structure of 0:12:17.640 --> 0:12:20.840 our pension insurance markets more broadly in our investing markets. 0:12:20.920 --> 0:12:23.240 And one of the challenges we've had in the UK, 0:12:23.400 --> 0:12:26.319 which is particular to the UK, is all the regulatory 0:12:26.400 --> 0:12:29.440 changes that closed our defined benefit schemes and then turn 0:12:29.520 --> 0:12:33.360 them into very very matched asset portfolios with a lot 0:12:33.400 --> 0:12:35.880 of fixed income in them. Meant that as a total 0:12:35.960 --> 0:12:39.160 pot of pension assets, we have less that's directed towards 0:12:39.200 --> 0:12:41.360 equity and the risk capital than you would have if 0:12:41.400 --> 0:12:44.200 you had you didn't have as much in runoff basically, 0:12:44.480 --> 0:12:46.200 and so that's one of the challenges that we need 0:12:46.240 --> 0:12:46.960 to address. 0:12:47.240 --> 0:12:47.880 But the other. 0:12:47.840 --> 0:12:51.120 Challenge is that actually we need to think about consolidating 0:12:51.200 --> 0:12:53.840 we have a very very large number of very small 0:12:53.920 --> 0:12:58.319 DC schemes in the UK that are then regulated basically on. 0:12:58.280 --> 0:13:00.880 The lowest price rather non best return. 0:13:01.440 --> 0:13:03.960 And if you want to diversified portfolio of assets, you 0:13:04.000 --> 0:13:06.640 need to get to a certain scale, particularly if you 0:13:06.679 --> 0:13:09.319 want to invest in private companies, because an awful lot 0:13:09.320 --> 0:13:10.000 of the value. 0:13:09.800 --> 0:13:11.920 Proposition is now being created in the private. 0:13:11.640 --> 0:13:15.280 Company and fundamentally it is de democratizing the market and 0:13:15.320 --> 0:13:17.640 the access for pension savers if they can't get access 0:13:17.640 --> 0:13:19.400 to those assets, because it just means a smaller and 0:13:19.440 --> 0:13:22.240 smaller number of people are benefiting in a greater and 0:13:22.240 --> 0:13:24.520 greater amount of the upside. But you need some structural 0:13:24.600 --> 0:13:27.200 changes in the way your pension funds are organized in 0:13:27.280 --> 0:13:29.200 order to be able to access and take advantage of 0:13:29.200 --> 0:13:29.679 those pools. 0:13:30.400 --> 0:13:32.960 One of the things you've said recently is around the 0:13:33.000 --> 0:13:36.280 issue of CEO pay in the UK, and obviously chief 0:13:36.280 --> 0:13:39.720 executives at fort two hundred companies earned significantly less across 0:13:39.720 --> 0:13:43.280 the board, mostly than in the US than their equivalents. 0:13:43.559 --> 0:13:45.599 How necessary is that do you think to kind of 0:13:45.679 --> 0:13:48.080 raise the standards of performance of companies in Britain. 0:13:48.559 --> 0:13:53.320 I understand entirely the issues around pay equity, and I 0:13:53.400 --> 0:13:56.320 understand particularly the challenges in terms of cost some living 0:13:56.520 --> 0:13:59.520 that it exists right now. But the phrase that we 0:13:59.559 --> 0:14:01.640 often use and seem it is we want the UK 0:14:01.760 --> 0:14:05.560 to create globally consequential companies. Now, to be a globally 0:14:05.559 --> 0:14:09.320 consequential company, you need to be running from London or 0:14:09.320 --> 0:14:12.199 from the UK into markets in the US, in Asia, 0:14:12.240 --> 0:14:16.000 et cetera. If in order to break into that particular market, 0:14:16.120 --> 0:14:18.120 you need to get the expert in that market to 0:14:18.120 --> 0:14:19.800 come and work for you, be that say in the 0:14:19.880 --> 0:14:23.280 US or Asia, and right now, because of the strictures 0:14:23.320 --> 0:14:26.080 that exist in the UK market, that person who would 0:14:26.120 --> 0:14:28.480 be game changing in terms of unlocking that value for 0:14:28.520 --> 0:14:31.800 the UK company unlocking that market would have to be 0:14:31.840 --> 0:14:33.800 paid more than the CEO and wouldn't be able to 0:14:33.840 --> 0:14:35.720 have any performance related pay on top of what they 0:14:35.720 --> 0:14:38.400 started at and is probably still taking a pay cup 0:14:38.440 --> 0:14:40.040 from what they'd be paid to work for an Asian 0:14:40.040 --> 0:14:42.920 company or a US company or even sometimes a European company. 0:14:43.320 --> 0:14:46.400 Then we've got to have a conscious understanding of the 0:14:46.400 --> 0:14:48.920 potential impact that has on the ability to create globally 0:14:48.960 --> 0:14:52.000 consequential companies. And so it's really about having a rounded 0:14:52.040 --> 0:14:54.960 conversation about what we want to be and how where 0:14:54.960 --> 0:14:57.320 we want to come out in the UK. And to me, 0:14:57.440 --> 0:15:00.320 it's about how we create these consequential companies that we 0:15:00.400 --> 0:15:03.680 have high quality, high paying jobs in the UK and 0:15:03.720 --> 0:15:06.160 we're driving in growth and investing in growth that actually 0:15:06.200 --> 0:15:09.280 produces a better quality of living for people, producers, taxes 0:15:09.320 --> 0:15:11.360 that pay for the NHS and everything else. 0:15:11.560 --> 0:15:12.960 It is a virtuous. 0:15:12.520 --> 0:15:15.360 Circle if you start investing in yourself, and that's the 0:15:15.400 --> 0:15:18.800 conversation that has sort of been missing in the paid conversation. 0:15:20.240 --> 0:15:22.720 As one of the other things that we did is 0:15:22.720 --> 0:15:26.680 we actually objectively we commission Willis Towns Watson. It's on 0:15:26.720 --> 0:15:29.200 the semate web see it to do a side by 0:15:29.240 --> 0:15:32.800 side analysis of the remuneration statements that the proxies were 0:15:32.840 --> 0:15:35.040 voting on for the UK, for Europe and the US. 0:15:36.080 --> 0:15:39.120 Now roughly speaking, in the US they say we will 0:15:39.160 --> 0:15:40.440 reward exceptional. 0:15:39.960 --> 0:15:42.320 Performance and we'll take global benchmarking into account. 0:15:42.960 --> 0:15:46.720 So if you're kind of looking at Maderna and Pfizer 0:15:46.800 --> 0:15:49.040 and GSK and as Zelling for or whatever, you're going 0:15:49.080 --> 0:15:52.200 to be looking at what those peers and equivalent companies 0:15:52.240 --> 0:15:55.480 are being paid to get the highest quality staff that 0:15:55.520 --> 0:15:59.160 you want to lead those companies. In Europe it says 0:15:59.200 --> 0:16:02.920 will reward acceptal performance, and in certain statements in the 0:16:03.000 --> 0:16:07.600 UK it says we will explicitly disregard global benchmarkt And 0:16:07.760 --> 0:16:11.960 so what we've actually done is we've hamstrung ourselves from 0:16:12.000 --> 0:16:13.320 creating a level playing. 0:16:13.040 --> 0:16:14.800 Field with which compete with the rest of the world. 0:16:16.320 --> 0:16:17.480 And it doesn't mean that's. 0:16:17.400 --> 0:16:20.000 Appropriate for every company, because if you're a purely domestic company, 0:16:20.040 --> 0:16:22.320 then obviously your price points are going to be entily domestic. 0:16:22.880 --> 0:16:25.480 But if you're trying to create a globally consequential company 0:16:25.480 --> 0:16:28.240 from the UK, which, to be honest, the history of 0:16:28.320 --> 0:16:30.240 US as a capital market and as as economy is 0:16:30.480 --> 0:16:32.760 of doing, then we need to make sure that we've 0:16:32.840 --> 0:16:35.920 understood the consequences if we have a different approach to 0:16:35.960 --> 0:16:38.360 the approach in Europe and the US will. 0:16:38.200 --> 0:16:40.000 Labor change anything if they come into power. 0:16:40.040 --> 0:16:41.520 How much focus do you think they'll have on the 0:16:41.520 --> 0:16:42.160 city of London. 0:16:42.240 --> 0:16:45.240 Have they reached out to talk about certain propositions. 0:16:46.320 --> 0:16:48.600 The one thing that I've observed over the last year 0:16:48.640 --> 0:16:50.920 and a half, particularly with the capital markets industry transforce, 0:16:51.560 --> 0:16:54.280 is a massive amount of consensus across both the City 0:16:54.520 --> 0:16:57.200 and on both sides of the Aisle about the need 0:16:57.280 --> 0:16:59.360 for this reform, and I think there is pretty clear 0:16:59.400 --> 0:17:03.680 consensus parties that this needs to happen. Fundamentally, if you 0:17:03.960 --> 0:17:07.120 slim it down, the UK has gradually over the last 0:17:07.160 --> 0:17:09.720 twenty thirty years stopped investing in itself and the City 0:17:09.800 --> 0:17:12.240 has done a great job of driving the UK's place 0:17:12.320 --> 0:17:15.439 as a global financial center, but it has sometimes not 0:17:16.119 --> 0:17:19.159 focused as much on how it directs capital into the 0:17:19.240 --> 0:17:22.879 UK economy to drive growth and fundamentally, whether you're the 0:17:22.960 --> 0:17:26.120 Tory Party or the Labor Party, that objective matters enormustry. 0:17:26.440 --> 0:17:29.240 I've never seen a level of consensus around this agenda. 0:17:29.320 --> 0:17:32.439 Well, I look at your website, Judy, the big banner 0:17:32.560 --> 0:17:36.359 is about seizing the green growth opportunity. And when you 0:17:36.520 --> 0:17:38.720 see what the rhetoric coming up for the government at 0:17:38.720 --> 0:17:41.200 the moment now and the pushback on net serial, how 0:17:41.280 --> 0:17:43.840 optimistic are you as London as a center for green 0:17:43.960 --> 0:17:46.720 finance and how important will it be to the mix 0:17:47.280 --> 0:17:49.920 of the stocks that we have dominating the London Stock 0:17:49.960 --> 0:17:50.960 Exchange in the years to come. 0:17:51.280 --> 0:17:54.560 So the UK actually has kind of world leading structures 0:17:54.600 --> 0:17:57.600 to support financing and the understanding of the greening of 0:17:57.600 --> 0:18:01.560 the economy, and I fervently believe that the just transition 0:18:01.600 --> 0:18:03.960 to net zero is the stewardship challenge of our generation, 0:18:04.359 --> 0:18:06.480 and there is a huge amount of opportunity there in 0:18:06.600 --> 0:18:09.879 terms of the transition of economic activity and the new 0:18:09.880 --> 0:18:13.280 opportunities that will come from it. Notwithstanding what's happened over 0:18:13.320 --> 0:18:16.120 the course of the last kind of a few weeks, 0:18:16.560 --> 0:18:20.000 the commitment to that underlying regulatory structure is completely unchanged, 0:18:21.200 --> 0:18:23.760 and therefore I think London could continue to be a 0:18:23.800 --> 0:18:25.639 global leader in Greek finance. 0:18:25.520 --> 0:18:27.520 When you look at the city of London and how 0:18:27.520 --> 0:18:30.000 it's changed double last fifteen to twenty years. I know 0:18:30.040 --> 0:18:33.240 you've spoken in the past about divers and inclusion, you know, 0:18:33.320 --> 0:18:36.040 being as important as climate change, Like what are we 0:18:36.119 --> 0:18:39.080 doing better than you thought we would? And what are 0:18:39.119 --> 0:18:40.000 we doing worse. 0:18:40.119 --> 0:18:46.320 On climate change or on diversitydity both? So I actually 0:18:46.320 --> 0:18:49.119 think we've got some We've got a lot of momentum 0:18:49.280 --> 0:18:52.040 on the financing of the transition to net zero. So 0:18:52.320 --> 0:18:55.320 I mean look as an exchange as an example, we're 0:18:55.320 --> 0:18:57.159 one of the we're certainly the only exchange in Europe 0:18:57.200 --> 0:19:01.240 that has got the green and marked for both listed 0:19:01.280 --> 0:19:06.000 equities and funds. We have a huge astaendible bond market 0:19:06.000 --> 0:19:08.320 that's growing and a very significant rate year on year, 0:19:08.800 --> 0:19:11.919 and we have the world's first volunteer carbon market financing market, 0:19:12.400 --> 0:19:14.119