Comment: Stock Exchange pushes the City from pole position
Friday 01 December 1995
Once the London market moves that way it loses its unique, poll position in Europe and just becomes part of the crowd, one of many. You and I could set up an order-driven trading system. All you need is a good computer; most of the European bourses already have one. By moving over to it, the London Exchange is copying the others. Though this may be just bowing to the inevitable - this sort of trading system seems to be what everyone wants these days - it is none the less a sad day for the City for it marks formally the beginning of the end of its pre-eminent role. It will take a good few years yet, but in time it won't much matter where you trade - London, Paris, Milan, Frankfurt or even Bombay for that matter.
All of which may make Merrill Lynch, SBC and Dresdner look a little silly. The prices they paid for Smith New Court, Warburg and Kleinwort Benson are suddenly looking rather generous. It is no secret that one of the great attractions of these City firms for their foreign owners was their lucrative market-making businesses. Smith New Court makes as much as 40 per cent of its money from market making. The quote-driven system is the hallmark of London; those who want to deal have little choice but to go through these powerful middlemen. The advent of order-driven prices alongside the quote-driven ones turns market makers into an endangered species.
The order-driven system dispenses with middlemen, offering the automatic and anonymous matching of buy and sell orders on the screen. If you place the two systems on the same screen for the same stock, as some advocate, the inevitable result will be to squeeze to almost nothing the margins that market makers exploit.
Michael Lawrence, chief executive of the Stock Exchange, hopes this belated revolution will stop the rot and shore up London's position. Will it hell. Ironically, it was the unrivalled skills and expertise of the market makers that gave London such an edge over the rest of Europe. The world has move on, and the Stock Exchange lamentably failed to seize the moment when it should have done several years ago.
- 1 Michelle Watt's father says TV presenter killed herself because she was in constant pain
- 2 Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
- 3 'Help me I'm trapped in a factory' messages keep being found on bottles of vitamin water
- 4 North Korean defector flees to Finland 'with evidence of chemical testing on humans'
- 5 Greek debt crisis: The photograph that conveys the despair of Greece's elderly
Nathan Collier: Montana man inspired by same-sex marriage ruling requests right to wed two wives
Greece crisis: IMF was pushed around by Angela Merkel and Nicholas Sarkozy – and now it is being humiliated
Forget little green men – aliens will look like humans, says Cambridge University evolution expert
'I wish the BBC would stop calling it Islamic State' – David Cameron unleashes frustration at broadcaster
Greece crisis: The wider lesson is that it’s time to abandon this failed experiment in currencies
Girl, 7, stares down hate preacher at Ohio festival with pro-LGBT rainbow flag gesture
iJobs Money & Business
£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...
£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...
£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....
£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...