Exchange ready to scrap Taurus

Click to follow
The Independent Online
THE FATE of Taurus - which is designed to replace paper records of share trading with an electronic system - will be decided at a Stock Exchange board meeting today, with several insiders expecting the 14-year-old project to be cancelled.

An urgent review of the project, which has so far cost the Stock Exchange pounds 70m, will be discussed. The review was launched in mid-January when testing of the Taurus system began. An announcement is expected this afternoon.

Directors of the Stock Exchange - who include such leading City figures as Lord Alexander, chairman of National Westminster, Sir Anthony Tennant, former chairman of Guinness, and Sir Michael Richardson, chairman of Smith New Court - were briefed on the project's problems yesterday.

Market-makers were believed to be united in wanting to abandon Taurus. One said: 'It should be killed off straight away.'

Further delays will cost the City huge sums but benefit public finances, as the Government has promised to drop stamp duty on share transactions once Taurus is introduced. Stamp duty raises pounds 800m a year for the Treasury.

Another Stock Exchange director, who did not want to be named, said that problems with Taurus once again raised doubts over the future of Peter Rawlins as chief executive of the exchange.

Non-executive directors of the exchange confronted him last year about the way it was run but later expressed confidence in him.

The chief executive of a large securities firm said: 'We will be the laughing stock of Europe.' Taurus is designed to bring London into line with other centres, many of which have already modernised. Several large investors say it is easier to deal in Paris than in London.

There is also widespread unhappiness about the role of Arthur Andersen Consulting, which runs the exchange's existing systems. Mr Rawlins is a former employee of Andersen.

Stock Exchange firms are angry that they have spent huge sums - some as much as pounds 10m internally as well as their share of the Stock Exchange bill - without any guarantee of seeing a return on that money. Large companies such as Barclays Bank have had teams working on Taurus for several years.

Taurus was designed to update the system for settling share deals - getting money to sellers and shares to buyers. It would replace the piles of paper involved in each transaction with electronic records.

Instead of holding share certificates, investors would receive statements similar to bank records. Companies have asked shareholders for approval to do away with certificates. In most cases this has been forthcoming, though there was criticism of the security aspects of Taurus at Marks & Spencer's annual meeting last year.

Development of Taurus has been dogged by delay from the start. Decided on in 1979, development did not get going until well after Big Bang in 1986 when new dealing systems were introduced.

It was given the go-ahead in 1989 with a target launch date of October 1991. But delays in drawing up legislation and systems meant the launch date was put back repeatedly.

The latest target was spring 1994, but many Stock Exchange firms are sceptical about the ability of the exchange and of their own back offices, which handle settlements, to meet the timetable.

A recent survey by City Consultants found that only four out of 250 stockbroking firms believed that the exchange would deliver Taurus on schedule.

The minimum cost of installing Taurus systems for small stockbroking firms is pounds 250,000. Some have had to merge to be able to afford the cost.

More than 90 per cent of cross-border share trading in Europe is carried on in London, but brokers say this business will move to other centres if London does not update its systems.

Commentary, page 31