The UK equity market is approaching irrelevance for retail investors as a shrinking pool of household names and a 0.5% stamp duty erode participation, according to Webull UK Chief Executive Nick Saunders.
Saunders cited a series of recent takeovers as evidence of the market’s declining appeal, including Gamma Communications’ recommended all-cash offer from private equity firm Epiris, Capricorn Energy’s backing of a cash takeover by Norway’s DNO ASA, and Bodycote’s agreement to a U.S. investment firm Veritas deal. Retail demand remains concentrated on U.S. equities, particularly breakout small caps, though U.K.-listed ETFs retain appeal for long-term strategies.
The executive criticized London Stock Exchange Group (LSEG) for prioritizing data product revenue over market functionality, noting that recent reductions in retail price distribution costs provide limited support. Saunders also opposed proposals to extend U.K. trading hours, arguing that spreading existing liquidity over longer sessions would reduce "liquidity density" rather than generate new activity.
Market makers and institutional traders, he said, allocate the same risk budget across extended hours, leading to longer inventory holding periods, widened spreads, and worse execution for market orders. While limit orders might see marginal improvements, their fill probability would decline, he added.
Saunders emphasized that stamp duty—a levy not applied to U.S. equities—remains a key deterrent for retail investors, further undermining the market’s competitiveness.
