* No repeat of frenzied U.S. trading in UK so far
* LSE has no plans to shift euro clearing out of London
* Focus on integrating Refinitiv, cutting debt
* Shift of swaps trading from UK to New York 'unexpected'
(Recasts with LSE CEO interview)
By Huw Jones and Rachel Armstrong
LONDON, Jan 29 (Reuters) - Britain should replicate New
York's "blank cheque" listings to boost London's appeal as a
global financial centre after Brexit, London Stock Exchange
Chief Executive David Schwimmer said.
After cementing its $27 billion acquisition of data and
analytics company Refinitiv on Friday, the LSE is likely to play
a central role in keeping Britain's huge financial services
sector competitive after its departure from the European Union.
This has cut the City of London adrift from its biggest
customer and facing listings competition from Amsterdam, where
the bulk of euro share trading in London moved on January 4.
"SPACs (Special Purpose Acquisition Companies) clearly have
taken off in the U.S. markets. There is increasing curiosity and
potential interest in seeing more of them here," Schwimmer said.
Paris and Stockholm are already focusing more on SPACs,
so-called blank cheque companies, that raise funds in an IPO
with the aim of buying a private firm. They became the most
popular investment vehicles on Wall Street last year.
A government-backed review of Britain's listing rules will
make recommendations next month to help London compete better
with New York in attracting tech company floats.
"We do think there are opportunities in the UK listings
regime to make some changes that would make us a more attractive
listing regime while maintaining high standards of corporate
governance," Schwimmer told Reuters.
"I think London will continue to maintain its status as a
global financial capital."
Refinitiv was 45% owned by Thomson Reuters, owner of Reuters
News, and Thomson Reuters now has a 15% stake in the LSE Group.
DISRUPTION
Schwimmer said frenzied retail trading in the United States
this week as investors encouraged each other to buy stocks
shorted by hedge funds had not yet been repeated on the LSE, but
the historic London exchange was watching closely.
"We've seen disruption by new technology and social media in
a number of other industries so in some ways it's not surprising
to see it in financial markets," he said.
"I will let the regulators determine whether there's a need
to take a careful look at this if it moves into the realm of
market manipulation because that would interfere with the
important goals of efficient capital allocation, efficient
capital raising and effective price discovery," he added.
The 300-year old LSE faces more immediate challenges.
It clears the bulk of euro-denominated interest rate swaps
for EU customers from London, but under temporary access to the
bloc that ends in June 2022.
Brussels is reviewing whether to grant long-term clearing
access, but in the meantime is piling pressure on euro zone
banks to shift their derivatives clearing business from the LSE
to rivals like Eurex in Frankfurt.
Schwimmer said the temporary access was "a strong signal"
that UK-based clearing is an important part of the EU financial
market and he looked forward to getting permanent access.
The LSE has a clearing unit in Paris, but obtaining a
licence to clear euro swaps would be costly.
"I am very comfortable with the current model of LSEG... Our
members do not want us to shift their clearing of interest rate
swaps out of London," Schwimmer said.
The shift of euro share trading from London to the EU this
month, some of its to the LSE's new Turquoise unit in Amsterdam,
was not a surprise, Schwimmer said.
But the shift of some swaps trading from London to New York,
following Brexit, was an unexpected consequence of the EU's
policy on cross-border derivatives trading, he said.
Cutting LSE's debt will be a priority over M&A activity,
helped by the sale of the Milan Exchange to Euronext for 4.3
billion euros ($5.2 billion), Schwimmer said.
The Refinitiv takeover included taking on the data
provider's net debt of $12.5 billion when the deal was unveiled
in August 2019.
Schwimmer added that he will focus on completing the
integration of LSE and Refinitiv, bolstering the exchange's
indexes business with data from Refinitiv, and broadening out
share trading with fixed income and FX trading.
Much of the integration has already been planned, despite
both companies grappling with COVID-19 restrictions.
"I wouldn't recommend trying to do a large scale integration
in the context of a global lockdown, but the team has done a
fantastic job," Schwimmer said.
($1 = 0.8239 euros)
(Reporting by Rachel Armstrong and Huw Jones; Editing by Jan
Harvey and Alexander Smith)
