The good, the bad and the merger
What will the London Stock Exchange merger mean for private investors?
Saturday 06 May 2000
The merger between the London Stock Exchange and the Deutsche Borse in Frankfurt to create the IX market was announced this week. What does it mean for the private investor? Jeremy King, head of personal investment at Pro-Share, provides some answers.
Q: If I own shares, do I have to take any immediate action? Should I talk to my stockbroker?
A: Private investors do not have to take any action at the moment. You can still use the same stockbroker.
Q: Will share prices now be quoted in euros?
A: Initially, the newly merg-ed market will quote share prices in both sterling and euros. The aim is eventually to quote only in euros, but this will take years to happen.
Q: Will dealing costs be more or less expensive?
A: There is good and bad news. The good news is that the merger ought to bring cost savings over time, although these are difficult to estimate at the moment. Using just one system instead of two should enable the merged exchange to cut costs. More immediately, the costs of a UK investor dealing in German shares should be cut by about two thirds.
The bad news is that when the system changes to all euros, smaller investors may face foreign exchange costs if they choose to keep their holdings in sterling. They may also face a currency risk if they sell them, if the pound moves against the euro. The merger parties say these costs are likely to be small.
Q: Does the merger mean I can buy German shares as well as UK ones?
A: Yes. One of the main advantages of the merger is that you will be able to buy and sell a far wider selection of shares. You will be able to buy and sell German shares as easily and cheaply as UK ones.
Q: Will the merger improve liquidity?
A: Yes. Since more than one Exchange will now be involved, there will be more people trading, and the spread between buying and selling prices should reduce. The exchanges in London and Frankfurt are in further merger talks with those in Milan and Madrid, which would increase liquidity even further. The special exchanges for technology stocks, the Techmark in London and Neuermarkt in Frankfurt, will be based in Frankfurt. They are set to link with NASDAQ, the US high tech exchange, again improving liquidity.
Q:: What will happen to stamp duty?
A:: The merger "must surely sign the death warrant for stamp duty on share transactions", according to the Association of Private Client Investment Managers and Stockbrokers (APCIMS). This is because in Germany there is no stamp duty on share deals. In the UK stamp duty is currently 0.5 per cent per trade. Many City experts predict that the merger will encourage the British Government to drop stamp duty on share deals altogether, at some stage in the future.
Q: Will the merger have any impact on stockmarket indices and tracker funds?
A: It should open the doors to new tracker funds based on bigger companies in a larger number of countries. A unit trust tracking the shares in the hundred biggest companies in the IX would look very different to existing tracker funds based on the FTSE 100.
Click on www.londonstockexchange.com for more details.
The Financial Services Authority consumer helpline is on 0845 606 1234 or have a look at www.fsa.gov.uk. Click on www.apcims.co.uk for the APCIMS website. ProShare is on www.proshare.org
- 1 Raif Badawi, the Saudi Arabian blogger sentenced to 1,000 lashes, may now face death penalty
- 2 PornHub turns masturbation into energy in bid to save the planet
- 3 Robert Mugabe eats a zoo for 'obscene' 91st birthday party
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 The jihadi girls who went to Syria weren't just radicalised by Isis — they were groomed
New theory could prove how life began and disprove God
This is what it's like to be dead, according to a guy who died for a bit
'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Ukip would cut billions from Scottish budget to fund English tax cuts
Russia's roadmap for annexing eastern Ukraine 'leaked from Vladimir Putin's office'
Ukraine crisis: Top Chinese diplomat backs Putin and says West should 'abandon zero-sum mentality'
iJobs Money & Business
£15000 - £16000 per annum: Recruitment Genius: A Customer Service Advisor is r...
£22000 per annum + pension,bonus,career progression: Ashdown Group: An establi...
£40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...
£30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...
Day In a Page
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads