City firms set for big Christmas bonuses after record volumes

A BUMPER crop of Christmas bonuses is in store for firms in the City of London because Stock Exchange members' profits recovered from a low in 1992 to beat 1989 levels, following record volumes on the London market.

The Stock Exchange's quarterly review, published yesterday, showed that member firms' corporate fees doubled and dealing profits climbed by 190 per cent in the first half of 1993 compared with the second half of 1992.

Total members' revenues rose by 49 per cent over the same period, with commissions up 53 per cent, following sterling's exit from the European exchange rate mechanism and a general upturn in economic activity.

But the Stock Exchange warns that the 'outlook is uncertain, with strong trading volumes and stock shortages tempered by investor nervousness about the strength of the UK recovery and the continuing European recession.'

The first half of 1993 saw a higher number of rights issues than in the whole of 1992, raising more than pounds 7bn. Turnover in overseas equities hit an all-time record in August. Members' total revenues recovered from pounds 485m in the third quarter of 1992 to pounds 1.01bn in the first quarter of 1993 and pounds 932m in the second quarter.

The Exchange review also shows that touches - the difference between best buy and sell prices - narrowed to their lowest since the 1987 crash.

There was also an increase in activity by individual investors, whose share of annual turnover rose for the first time since 1989 from 14 per cent last year to 16 per cent in 1993.

The Exchange warned that enhanced scrip dividends, which give tax advantages to issuing companies, may lose their privileges in next week's Budget.