City makes pitch for northern stock exchange

Tom Riordan, the former head of regional development agency Yorkshire Forward, said the public and private sectors were considering the viability of a scheme which could see a stock exchange return to Leeds after a 37-year absence.

Speculation is mounting that regional stock exchanges will be opened as part of Government plans to help companies outside London attract funding.

Business Secretary Vince Cable is reportedly considering such plans.

In the early 20th century, many cities had their own stock exchanges, or bourses, including Leeds and Halifax.

The last 11 provincial bourses became part of the London Stock Exchange in 1973.

In an interview with The Sunday Times, Mr Cable said he believed that a wave of new regional stock markets would help firms with a turnover of about 10m to attract investors.

Mr Cable told the paper: "There are an awful lot of successful medium-sized businesses that can't get into the London Stock Exchange because it is very, very expensive to list. They even find it difficult to get on to AIM (the Alternative Investment Market) which is supposed to be for growth companies.

"At the moment, small and medium-sized businesses are almost entirely dependent on relatives to come up with equity or banks to come up with loans.

"The belief is that, if you have exchanges elsewhere, there will be local angels wanting to invest in their area."

Mr Riordan said yesterday: "The Government's ideas about local stock exchanges are very interesting. Business leaders such as Sir Ken Morrison (the former chairman of Bradford-based supermarket chain Morrisons) have said for many years that companies based outside the M25 are sometimes undervalued by City-based analysts.

"The natural location for a Northern Stock Exchange would be Leeds. The Leeds city region is actively assessing the feasibility of this and similar ideas to get more capital investment flowing into companies, projects and partnerships in our area.

"Such proposals are bound to need help from Government and the Bank of England to create incentives for investment to flow our way, but we know we have the companies and projects – especially on low carbon – that would be attractive to investors given the right risk profile.

"We are keen to hear ideas from the private sector and we will be working closely with Leeds Chamber to develop them."

Shares in companies were traded in Leeds from the 18th century, and many public auctions of shares were held in the taverns and coffee houses around Briggate and Boar Lane.

The railway boom of the mid 19th century led to a stock exchange being established in Leeds. The number of stockbrokers grew from two in 1836 to more than 100 by 1845.

In 1844 the Leeds Stock Exchange Association was formed. It built its own premises in Albion Street in 1846 at a cost of 12,500. For many years, Leeds was the only provincial town that could boast its

own purpose-built stock exchange.

It was even used for special events, such as a dinner to mark the Battle of Balaclava in the Crimean War.

In the 19th century, communication with the City of London was poor, which bolstered the provincial exchanges and allowed them to operate autonomously.

However, improved telecommunications in the UK led to their demise.

Leeds-based brokers started to trade directly by phone.

Initially, the exchanges were clustered into regional exchanges.The Leeds Exchange became part of the Northern Stock Exchange, including Liverpool, Manchester and Newcastle.

As communications improved, the need for a separate exchange disappeared and the Leeds operation closed in 1973.

CLEGG CALL WAS NO FIRM FAVOURITE

A proposal to reintroduce regional stock exchanges was first suggested last year by Liberal Democrat leader Nick Clegg, before he became Deputy Prime Minister.

In October 2009, Mr Clegg, below, told business leaders at the National Liberal Club that the Liberal Democrats would review the viability of reintroducing regional markets to see "what role they might play in Britain's economic recovery".

However, a number of business leaders questioned the viability of small localised stock exchanges in a globalised world.

At the time, prominent Leeds stockbroker Keith Loudon said Mr Clegg was talking rubbish.

Other commentators – such as Margaret Wood, the chairman of the Institute of Directors in Yorkshire and the Humber – said it was more important to encourage banks to start lending.

Yesterday Tony Cherry, Sheffield-based vice chairman of the Federation of Small Businesses, said: "Before we rush into it (reintroducing regional stock exchanges) I would like to have more details."

Mr Cherry added that it was important to support British manufacturing to ensure that the UK has a balanced economy.