CoL report: London comes first for low cost capital

29 June 2006

The City of London and The London Stock Exchange issued a report on the costs of listing and raising capital in the London markets compared with other major financial centres. The study compares London’s equity markets with Deutsche Boerse and Euronext, and with the New York Stock Exchange and Nasdaq in the USA.

The report finds that the London markets are cheaper than NYSE and Nasdaq with respect to both underwriting fees and other direct IPO costs. Other direct IPO costs, such as legal and auditing costs, are also reported to be lower in London than in the US, largely due to the costs of complying with Sarbanes-Oxley. Despite the additional costs associated with a US listing, the report finds no evidence that Sarbanes-Oxley has delivered any significant regulatory benefits not already available under the UK corporate governance regime, enabling London to maintain its lead in this area.

Secondary market trading costs (e.g. brokerage commissions and fees) are also analysed in the report. Stamp Duty is identified as the principal factor affecting the overall cost of trading in the UK. Except for Stamp Duty, London enjoys the lowest direct trading costs of all the exchanges in the sample.

Full report

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