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Brokers team up on new platform to boost retail interest in UK capital markets

People walk over the Millennium Bridge with the City of London financial district in the background, in London, Britain, January 13, 2023. REUTERS/Henry Nicholls

Investment firms and brokers in Britain teamed up on Thursday to back a new standalone retail platform to strengthen access for small investors to the UK capital market.

Investment bank Peel Hunt’s REX distribution platform will become a standalone business known as RetailBook in the second half of 2023, the company said.

Jefferies, Numis and Rothschild & Co will enter into a pact with the platform with the right to buy stakes, the company said, adding that Hargreaves Lansdown will sign an exclusivity agreement for follow-on equity fundraisings.

By combining forces, the brokers can wield more influence in the face of institutional investors, who are typically first in line for initial public offerings and capital raising by companies.

“The collaboration of market participants using this service is an important step towards the more equitable inclusion of retail investors in UK capital markets,” said a joint statement from brokers.

Britain is reforming its financial rules post-Brexit and is looking to copy the much deeper, broader culture of retail investment evident in the United States.

One aim is to make it easier for retail investors to participate in capital markets, a step the European Union is also working on, with legislative proposals due in April.

“The acceleration in adoption of REX on capital markets transactions and the formation of strategic partnerships have taken place against the backdrop of significant regulatory tailwinds,” the statement said.

The government has said it will implement recommendations from a review of secondary capital markets to overhaul company fundraisings and give more access to retail investors.

REX enables retail investors to participate in capital markets transactions such as initial public offers and follow-on equity offerings through retail brokers and wealth managers.

“The growth of REX has reflected the increasing importance of the retail investor over recent years, with adoption of the technology on both primary and secondary transactions accelerating,” said Steven Fine, Chief Executive of Peel Hunt.

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