U.S. capital market competitiveness remained weak through the fourth quarter of 2015, as certain measures of aversion to U.S. public equity markets reached levels not seen since the 2007-08 financial crisis.


“2015 was another disappointing year for the global competitiveness of U.S. capital markets,” said Prof. Hal S. Scott, Director of the Committee on Capital Markets Regulation. “The international stature of the U.S. capital markets continues to fall from its historical prominence.”


The U.S. share of global IPOs by foreign companies decreased to 3.6%, the lowest level since 2008 and a substantial decline from both the 26% recorded in 2014 and the historical average of 26.8% (1996-2007). This year-end data shows that the inflated 2014 percentage was an anomaly caused by the record-breaking initial public offering of the Alibaba group.


None (0) of the top 20 largest global IPOs occurred in the U.S. public markets. This represents a decline from the two (2) that occurred in 2014 and a significant drop from the historical (1996-2007) average of four (4) per year (20%). The absence of the largest new listings from the U.S. equity markets indicates that the most significant new issuers choose to avoid the U.S. public markets.


Foreign companies that raised equity capital in the United States in 2015 did so overwhelmingly via private rather than public offerings. Over 95% of initial offerings of foreign equity in the United States were conducted through private Rule 144A offerings rather than public offerings. This measure of aversion to U.S. public equity markets is at its highest level since 2008 (95.5%) and stands significantly higher than the historical average of 66.1% (1996-2007) and the 2014 average of 64.4%.


Only two (2) foreign companies cross-listed in the United States in 2015, less than half of the number that cross-listed in 2014 (and the five (5) in 2014 represented a five-year low). 2015’s record low cross-listing activity is a far cry from the 2000-2007 average of 17 cross-listings per year.


The U.S. share of the value of global share trading declined to an historic low of 29.9%, a significant drop from the 36% in 2014 and substantially lower than the historical average of 50.6% (1990-2007). The continuing decline in the U.S. share suggests that the weakness of U.S. primary markets is bleeding into secondary markets.


The report is available here.


The CCMR believes that the policy recommendations in its 2006 Interim Report remain essential to the restoration of U.S. competitiveness. “We urge regulators implementing the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act to minimize the adverse competitive effects of new regulations, particularly in areas where the U.S. regulatory approach differs significantly from competitor markets,” said Scott.

Historical data are available at capmktsreg.org.


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For Further Information:


Hal Scott,

Director, Committee on Capital Markets Regulation