HSBC to Close M&A and Equity Capital Markets Operations in Europe and Americas
HSBC has announced plans to shut down its mergers and acquisitions (M&A) and equity capital markets (ECM) operations in the UK, Europe, and the Americas. This strategic move aims to cut costs and streamline the bank’s focus under the leadership of CEO Georges Elhedery. Despite this withdrawal, HSBC will maintain its global presence in debt capital markets and leveraged acquisition finance, concentrating efforts in major markets like Asia and the Middle East. The decision aligns with broader efforts to simplify operations and improve efficiency, potentially leading to job cuts or redeployments.
FCA Opts Against Specific Rules on Encrypted Messaging Apps
The UK’s Financial Conduct Authority (FCA) has decided not to implement specific regulations to prevent bankers from using encrypted messaging apps like WhatsApp for business communications. Instead, the FCA will work with firms individually to monitor activities and ensure proper market integrity and record-keeping. This approach contrasts with the US, where financial institutions have faced significant fines for similar practices. The FCA’s decision aligns with the UK government’s push for regulators to support economic growth by reducing bureaucratic burdens.
Good Energy Agrees to Near-£100 Million Takeover by UAE-Linked Firm
Good Energy, a UK-based renewable electricity provider, has agreed to a near-£100 million takeover by Esyasoft, a Dubai-headquartered company controlled by a member of Abu Dhabi’s ruling family through the International Holding Company (IHC). The acquisition, priced at £4.90 per share, significantly exceeds Good Energy’s previous share price. Esyasoft plans to expand Good Energy’s offerings and enter new markets while maintaining its current operations with minimal disruption. The deal awaits shareholder approval.
Saba Capital Targets Smithson Investment Trust
New York hedge fund Saba Capital has set its sights on Smithson Investment Trust, managed by renowned stock picker Terry Smith. Despite initial investments of £7.4 million through total return swaps, it appears Saba may have withdrawn, as suggested by Smithson’s broker, JP Morgan. Smithson, a popular FTSE 250 trust launched in 2018, has underperformed recently, with its discount widening to 13.6% despite significant share buybacks totaling £500 million since 2022. This move is part of Saba’s broader strategy of targeting underperforming trusts and advocating for changes to narrow discounts.
UK to Transition to T+1 Securities Settlement Cycle by October 2027
A government-appointed taskforce in the UK has recommended transitioning to a T+1 (next-day) securities settlement cycle from October 11, 2027, aligning with the EU and Switzerland. This move aims to reduce risk and increase liquidity in the financial markets. The process will involve planning and budgeting in 2025, building and implementing solutions in 2026, and final testing and migration in 2027. The shift positions Europe and the UK to catch up with the US, which moved to T+1 in May 2022.
Appointments to the Capital Markets Industry Taskforce
Erin Platts, CEO of Octopus Ventures, and Lisa Gordon, chair of investment bank Cavendish, have joined the Capital Markets Industry Taskforce (CMIT). Initiated in 2022 by London Stock Exchange CEO Dame Julia Hoggett, CMIT aims to revitalize the UK’s capital markets amid declining investments and IPO activities. The taskforce convenes monthly and includes members from prominent firms, focusing on ensuring the competitiveness and dynamism of the UK’s capital markets.
UK Government Plans Private Share Trading Platform
The UK government plans to launch the Private Intermittent Securities and Capital Exchange System (Pisces) in May 2025, a regulated secondary market for private share trading. This platform aims to provide more investment opportunities for the UK’s fast-growing private companies, offering benefits such as selective shareholder choice, lower intermediary costs, and concentrated trading sessions. Critics argue that Pisces might undermine London’s public markets by offering companies many public market advantages without stringent public market rules. Despite the criticism, private trading markets have thrived in the US and Middle East, showing significant capital growth.
London Stock Exchange Experiences 18 Months of Listing Outflows
The London Stock Exchange (LSE) has experienced 18 consecutive months of listing outflows from July 2023 to December 2024, with the number of listed companies on London’s main market decreasing by 115, dropping below 1,000 companies. While only 27 companies joined the market, 142 companies canceled their listings, many opting to move overseas for better capital opportunities. The UK’s regulatory framework and low valuations have contributed to this trend. The government and regulators are implementing measures to make London’s market more attractive, including an overhaul of listing regulations and the introduction of a private stock market. Experts see potential recovery signs and anticipate increased IPO activity in 2025, with major companies like Shein and Shawbrook considering London floats. Despite the challenges, LSE remains Europe’s largest exchange by capital raised in the past year, and industry leaders remain hopeful for a resurgence in listings.
