Lets wait and see.
Banks plan pan-Europe share trade rival to LSE
By Martin Waller
From The Times
SEVEN of the City’s biggest banks will today announce the formation of a pan-European electronic shares trading platform that would compete directly with the London Stock Exchange and other continental markets.
The new exchange would be up and running in early 2008, just months after the implementation of the EU’s Markets in Financial Instruments Directive (Mifid) in November next year.
The directive allows the creation of cross-border “multilateral trading facilities” among member states that adopt it. If the scheme goes ahead it will provide banks, fund managers and other institutions with a trading platform quite independent of the various national exchanges. On it, they could buy and sell electronically a wide range of leading European equities, including the components of the FTSE 350 share index in the UK. Just how many shares could be traded would depend on customer demand, but those behind the scheme insist it is not the intention to limit this to solely the most liquid stocks.
None of the participants was prepared to comment ahead of the formal launch today. But the new facility would be run as a utility and so not required to make a profit, which suggests that it would undercut fee levels on existing exchanges.
The big banks have in the past threatened to set up a rival platform, but until now nothing has come of it. The proponents of the latest scheme insist they are serious and that it is not merely an attempt to put pressure on the LSE and others to cut fees.
“It will be a pan-European trading system that sits side-by-side with existing exchanges,” insisted one party to the project. Although owned by the seven banks, it would be an independent entity and open to anyone to trade on. “For this thing to be a success, it’s going to need as many users as it can find.”
A rival to the LSE and to the exchanges in Paris, Germany, Spain, Italy and the various other countries pledged to sign up to Mifid would be welcomed by market users. Terry Smith, chief executive of Collins Stewart Tullett, which owns the stockbroker Collins Stewart, said: “It illustrates the fact that in our view the most valuable commodity you can have in setting up an electronic platform is liquidity.
“The major investment banks have that, so it’s hardly surprising that they have decided to set up their own exchange.”
The initiative comes as various exchanges, including the LSE, square up to possible takeover bids that could exert downward pressure on their tariffs if they bring with them cost savings.
Yesterday Euronext, which is trying to merge with the New York Stock Exchange, said it expected to cut its fees by 10 to 15 per cent after the merger by combining the two IT systems.
The banks involved will only be identified today, but they are understood to include Deutsche Bank, Goldman Sachs, Citigroup and Merrill Lynch.
They will now seek a contractor to put together the electronic network. The technology is well advanced, and a number of exchanges have pioneered their own systems, which they are keen to sell elsewhere. The LSE has its Sets paperless trading platform, and the technology built up by OMX, the Stockholm exchange, is also well regarded.
Banks plan pan-Europe share trade rival to LSE
By Martin Waller
From The Times
SEVEN of the City’s biggest banks will today announce the formation of a pan-European electronic shares trading platform that would compete directly with the London Stock Exchange and other continental markets.
The new exchange would be up and running in early 2008, just months after the implementation of the EU’s Markets in Financial Instruments Directive (Mifid) in November next year.
The directive allows the creation of cross-border “multilateral trading facilities” among member states that adopt it. If the scheme goes ahead it will provide banks, fund managers and other institutions with a trading platform quite independent of the various national exchanges. On it, they could buy and sell electronically a wide range of leading European equities, including the components of the FTSE 350 share index in the UK. Just how many shares could be traded would depend on customer demand, but those behind the scheme insist it is not the intention to limit this to solely the most liquid stocks.
None of the participants was prepared to comment ahead of the formal launch today. But the new facility would be run as a utility and so not required to make a profit, which suggests that it would undercut fee levels on existing exchanges.
The big banks have in the past threatened to set up a rival platform, but until now nothing has come of it. The proponents of the latest scheme insist they are serious and that it is not merely an attempt to put pressure on the LSE and others to cut fees.
“It will be a pan-European trading system that sits side-by-side with existing exchanges,” insisted one party to the project. Although owned by the seven banks, it would be an independent entity and open to anyone to trade on. “For this thing to be a success, it’s going to need as many users as it can find.”
A rival to the LSE and to the exchanges in Paris, Germany, Spain, Italy and the various other countries pledged to sign up to Mifid would be welcomed by market users. Terry Smith, chief executive of Collins Stewart Tullett, which owns the stockbroker Collins Stewart, said: “It illustrates the fact that in our view the most valuable commodity you can have in setting up an electronic platform is liquidity.
“The major investment banks have that, so it’s hardly surprising that they have decided to set up their own exchange.”
The initiative comes as various exchanges, including the LSE, square up to possible takeover bids that could exert downward pressure on their tariffs if they bring with them cost savings.
Yesterday Euronext, which is trying to merge with the New York Stock Exchange, said it expected to cut its fees by 10 to 15 per cent after the merger by combining the two IT systems.
The banks involved will only be identified today, but they are understood to include Deutsche Bank, Goldman Sachs, Citigroup and Merrill Lynch.
They will now seek a contractor to put together the electronic network. The technology is well advanced, and a number of exchanges have pioneered their own systems, which they are keen to sell elsewhere. The LSE has its Sets paperless trading platform, and the technology built up by OMX, the Stockholm exchange, is also well regarded.
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