This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

How important is the Individual Shareholder to UK PLC in the current climate?

On Thursday 7 May 2020 The LSE and Primary Bid ran a webinar on How important is the Individual to UK PLC in the current climate?

There was an impressive panel made up of:

  • Gavin Oldham, Chairman – Share Centre
  • Richard Wilson, CEO – interactive investor
  • Angela Knight CBE
  • Andy Edmond, CEO, Equity Development
  • Marcus Stuttard, Head of UK Primary Markets and AIM – London Stock Exchange plc
  • The Chairman was  James Deal, COO – PrimaryBid

The topics  discussed were:

  • The daily trading flows and market impact from the retail investor
  • How to broaden the shareholder register beyond the core institutions
  • How technology can improve communication and facilitate participation in capital raisings with a broader shareholder base.

My summary of the points where there seemed to be general agreement:

  • the retail investor is important,
  • retail investors are mainly sensible long term investors,
  • day traders are a tiny minority, but make a lot of noise on bulletin boards,
  • companies engaging with retail investors is a good thing,
  • all investors should be treated equally, i.e. large institutional investors and retail investors should have the same rights and treatment
  • the new normal is doing things remotely. This will not be temporary.
  • retail investors have been net buyers of the market in March and have made up a large proportion of trading (c20% in March v 5% previously): currently 2-3:1 net buying behaviour by retail investors.

Angela Knight impressed me and made a number of good points, including the point that too many regulations are to protect clients of companies, not to allow clients to make their own choice. I agree -there is a danger of the nanny state. Some regulation is necessary, but the cost benefit of much is questionable.

Richard Wilson said that

  • ii now trade one seventh of all UK shares traded.
  • ii March volumes were 3 times normal levels.
  • ii attracted £1bn of new money in March, which went roughly 60% into equities and 40% ETFs, which meant that there was net zero into funds and investment trusts.
  • Many previous dormant customers were re-emerging
  • Of their 330,000 customers <50,000 trade more than 30 times per year: 2% trade > 100 times a year. The majority of ii customers are discerning, thoughtful long term investors.
  • One third opt in to the ii free service of voting and information rights (i.e. c. 100,000). Of these about 20,000 exercise their rights in a year.

Cliff Weight, Director, ShareSoc

One comment
  1. cliffw8 11th May 2020 at 11:57 am

    Another point Richard Wilson made, at the Thursday seminar, was that ii find it a challenge to get enough IPO value allocated to them. As a consequence, they only have one guy working on IPOs as there is not enough volume of business to justify more staff in this area. Richard said he would like 10% to 20% of fund raises reserved for retail investors in fund raises and he felt sure that he could fulfil his share (i.e. ii’s share).

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