London's flagship indexes may be trading near all-time highs, but beneath the surface, 2026 has been another bruising year for the City's bourse. Dame Julia Hoggett, who has led the London Stock Exchange for nearly six years, insists the pessimism surrounding Britain's capital markets is overblown — even as companies continue to depart at an unprecedented pace.

In the foyer of London's historic stock exchange, a giant display flashes green: the FTSE 100 is nearing the record it set in February, before geopolitical turmoil — Donald Trump's military action in Iran — sent oil prices surging and equities sliding. The FTSE 250, long overshadowed by its larger counterpart, is also riding a fresh high. Even the embattled junior market, Aim, has climbed six per cent in the first week of August.

Yet for Hoggett, those encouraging numbers are a mere subplot. The real story of 2026 is one of an exodus: the steady flow of companies leaving the exchange has become a torrent, while the trickle of replacements has all but dried up. It is a pattern that has accelerated since London briefly lost its position as Europe's top share-trading venue to Amsterdam in early 2021 — a moment that, while since reversed in overall trading volumes, crystallised anxieties about the City's post-Brexit competitiveness.

A Testing Year for London's Bourse

More than 30 companies have already left or are preparing to depart London's main market this year. Including Aim departures, the figure is higher still. Some firms are seeking listings elsewhere; a handful of smaller companies simply want to shed the burdens of public-market life. But the overwhelming majority are being acquired by foreign rivals or investors.

Among the most prominent departures: investment manager Schroders, acquired by its larger US rival Nuveen; insurer Beazley, relocating to Zurich; and FTSE 100 stalwart Intertek, snapped up by Swedish private equity giant EQT in June. City figures have warned that the exchange is "on life support," being "gutted," and serving as "fertile ground for bargain hunters."

With animal spirits in short supply, recriminations have followed. Some blame successive governments; others point fingers at the City's regulators and pensions industry. A growing minority, however, are directing their frustration at the LSE and Hoggett herself, arguing that amid the deluge of departures, the exchange's leadership has lacked the urgency — or, as Octopus founder Greg Jackson put it, the "hustle" — the situation demands.

Sitting down for her first major interview in over six months, the softly spoken, bespectacled chief executive is determined to push back against what she sees as a narrative of managed decline.

"We are third in the world at creating companies, third in the world at scaling companies," Hoggett tells City AM. "We have the second, third, or fourth largest volume of institutional capital in the world, depending on how you count it. [And we] create more consequential research per capita than anywhere else."

To Hoggett, the grim mood pervading the Square Mile is less a symptom of British capital markets' failings than a root cause of them. "We need to stop throwing shade at ourselves as a nation and then being surprised if it's a bit chilly and a bit dark and a bit damp," she says. "Most countries in the world want exactly what we've got."

Yet for all her talk of cynical attempts "to fit a set of facts into a narrative," the data tell a story that even the exchange's staunchest defenders struggle to dismiss.

IPO Drought Extends Into a Fifth Year

Within days of the interview, another wave of takeover activity and delisting announcements dominated financial headlines. Easyjet was scooped up by American private markets behemoth Apollo. On Wednesday, Bodycote — an industrial stalwart listed on the London Stock Exchange for more than half a century — disclosed two near-identical takeover bids from buyout giants CVC and Veritas.

The alarm would be less acute were a steady stream of new listings arriving to replace the departures. But since a blockbuster 2021, when roughly 50 companies chose London for their public debuts, both the scale and frequency of initial public offerings have ground to a halt.

So far this year, there has been only one capital-raising IPO of note: Uzbekistan's national investment fund, dual-listed with Tashkent. Meanwhile, key candidates including Waterstones, Visma, and payments firm Sumup are all reported to have deferred their London listings to 2027.

Hoggett strikes a notably sanguine tone on this front. The exchange, she says, has "the biggest pipeline we've had in 20 years." Rather than spending her time persuading companies to commit, her role is to be prepared for when they do.

"I can tell you that we have the highest number of companies by the greatest value in our pipeline preparing to execute than has been the case since I've been here," she says. "When they choose to come? That's their choice."

The IPO slowdown has persisted despite a five-year effort by Hoggett — a self-described workaholic who is rarely "not thinking about work" — to ready the exchange for a capital markets landscape vastly different from two decades ago. Companies increasingly prefer to remain private for longer, and European founders, like their American counterparts, demand greater control over their businesses even after going public.

Among Hoggett's earliest major initiatives was an attempt to address those "problem statements," overseeing what was hailed as the most sweeping overhaul of listing rules in a generation. Carried out in coordination with the Financial Conduct Authority (FCA), the reforms — which aligned London's dual-class share structures and disclosure requirements more closely with lighter-touch regimes in New York and Amsterdam — drew widespread praise. She has since launched a follow-up effort to revive Aim.

LSE's Pisces Market Shows Signs of Life

Alongside the listing reforms, the LSE has launched a private market under the FCA's PISCES regime, enabling companies to trade shares in predetermined windows. The initiative has divided the City: supporters hail it as an innovative mechanism for matching buyers and sellers in companies not yet ready for an IPO, while critics call it a solution in search of a problem.

The London Stock Exchange's Private Securities Market, however, is showing early momentum. Autonomous driving firm Wayve and fintech Moneybox — which completed a milestone £45 million transaction — have both executed deals on the platform in the past two months, and Hoggett says interest from others is "building."

If the infrastructure has improved so markedly under her tenure, what — beyond sentiment — explains the state of Britain's stock market? Hoggett points to what she calls the "perverse" incentives that discourage investment in UK assets.

"We have structurally, over the course of the last 25 years, changed the nature of our capital from risk capital to defensive capital, and removed almost all of the incentives to invest in the UK," she says. "We charge UK investors to buy UK assets in a way we don't charge them to buy non-domestic assets."

Her principal target is stamp duty on shares — the 0.5 per cent tax applied every time a London-listed stock changes hands. The levy means investors can trade Tesla, Nvidia, or Apple free of charge, while equivalent investments in AstraZeneca, HSBC, and Rolls-Royce are taxed. It is a charge that places London at a competitive disadvantage to most major global exchanges; the United States abolished its equivalent federal stock transaction tax in 1965, and no European peer imposes a comparable levy on secondary-market trades at the same rate.

Unlocking Pensions and ISA Pots

Hoggett argues that the transaction tax partly explains why Britain's two largest pools of capital — pension funds and ISA holdings — have shunned domestic equities in favour of American and Asian markets. UK pension funds held roughly 75 per cent of domestic equities in the early 1990s; that figure has since fallen below 5 per cent — a retreat that has hollowed out the domestic investor base for the very companies the exchange needs to retain and attract.

The fact that retail investors and annuity fund managers continue to enjoy other fiscal subsidies while doing so should, she says, be a matter for "genuine public debate."

"Most nations we compare to ourselves have a greater bias, both culturally and institutionally, in their domestic investment," she says. "And I think most pensioners in this country think their pension fund is actually being invested in the economy that will be the future of their kids. I think quite a lot would be shocked to know how little of them actually are."

To address this, Hoggett urges Britain's pension sector to honour the commitments made at last year's Mansion House Accord, under which some of the UK's largest providers pledged to allocate at least five per cent of their portfolios to UK private assets. The accord has drawn criticism for its sluggish and non-committal implementation.

While she is somewhat sympathetic to the argument that many pension funds lack the resources to build private equity and venture capital arms, she dismisses any suggestion that Britain lacks high-quality investment opportunities.

"We need more transparency for pensioners and for those investing in the UK as to where their money actually is invested," she says. "Arguably I think one of the most valuable things for the UK would be for that transparency to be there sooner and more visible soon. I think it would lead to an ability to measure the tangible change that these initiatives have fostered."

Any meaningful tailwind from these structural shifts, however, feels distant for a bourse losing constituents rapidly and in need of immediate results. Less than two days after the interview, Glencore, the Anglo-Swiss commodities giant, announced plans to add a secondary listing in Sydney, citing frustration over years of stubbornly low valuations despite a strong run of trading performance. The move underscored a persistent complaint among London-listed companies: that UK markets assign lower valuations than rival exchanges, leaving firms vulnerable to precisely the kind of opportunistic foreign bids that have defined 2026.

Yet whether through regulatory overhauls, persistent campaigning, or even symbolic touches like "confetti on the balcony" at major LSE events, Hoggett remains convinced the exchange is charting the right course.

"I am an optimist," she reflects. "But I don't think it's false optimism."