Exchange takes Barfield on board

Dick Barfield, an outspoken critic of market-makers' privileges, has been appointed to the board of the Stock Exchange, writes John Willcock.

This will bring Mr Barfield, director of investment at insurance giant Standard Life, face to face with representatives of market-makers such as Smith New Court and SG Warburg who already sit on the board.

Mr Barfield admits he is in a small minority even among institutional investors in his views. What particularily exercises him is the market- makers' ability to delay notification of big share trades, and the prices at which they are made. This has been hotly debated during and after the recent Securities and Investments Board investigation into market- makers' privileges.

"We as a house are worried about the transparency of the market," Mr Barfield said. "Transparency matters because it will increase liquidity. More users will have the confidence to invest." He said institutions might not be getting the best price possible under the present system, because other secret market-makers' trades would be going on without their knowledge.On the other hand, many institutions were prepared to go along with this, trusting their market-makers' argument that current practice helped them to increase liquidity.

The issue came down to confidence. "The more people believe the quotes they see and the deals they see, the more they are likely to deal," he said.

The exchange has appointed two other new board members, both from outside the market-making sector - Graham Allen, managing director of ICI Investment Management, and Nigel Sherlock, chairman of Wise Speke, a private client stockbroker.

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