U.S. capital markets should accept that London's Alternative Investment Market (AIM) is not simply attracting company listings due to the hassle of U.S. regulation, the head of the London Stock Exchange said.
Instead, the junior British stock market was an attractive destination in an increasingly global marketplace, Clara Furse wrote in a letter published in the Financial Times on Tuesday.
"With so many U.S. companies choosing AIM over a listing on one of their national markets, it may be tempting for Americans to identify with an endogenous cause (such as the burden of U.S. regulation) rather than an exogenous challenge (such as the prodigious growth of AIM)," the LSE chief wrote.
Furse said AIM had attracted companies from Australia, Canada, China, Germany, Israel, Ireland, Italy and Sweden among others, adding: "And the last time we checked, none of those countries were subject to the oversight of U.S. regulation."
The comments, in response to an earlier letter from Neal Wolkoff, chairman and chief executive of the American Stock Exchange, came a few weeks after a U.S. Securities and Exchange Commissioner referred to AIM as a "casino," the FT reported.
"For the U.S. capital markets to come to terms with the success of AIM, they need to accept, as Mr. Wolkoff suggests, that capitalism depends on entrepreneurial risk," Furse wrote.
"But rather than navel-gazing based on the dubious premise that the U.S. is the home of capitalism', they might be better served by accepting that the flow of capital is global and will seek out the most efficient and effective marketplaces."
Barney Frank, chairman of the U.S. House of Representatives Financial Services Committee, dismissed fears that company listings were shunning New York for London in an interview with the FT published on Monday.
The number of international companies listed on AIM rose to ore than 300 at the end of 2006 from 220 a year earlier.