London Stock Exchange valued at just £653m

Hopes of big killings to be made by brokers offloading shares in the London Stock Exchange bit the dust yesterday after the first day of trading ended with the shares bid at £22, valuing the exchange at £653m, towards the low end of expectations.

Hopes of big killings to be made by brokers offloading shares in the London Stock Exchange bit the dust yesterday after the first day of trading ended with the shares bid at £22, valuing the exchange at £653m, towards the low end of expectations.

The shares, which are being traded on a limited match-bargain system operated by the stockbrokers Cazenove, were initially quoted at £28, giving the exchange a value of £831m. But there was little buying volume to sustain that value. By the end of the day, 670,000 shares of the 29.7 million in issue had changed hands.

The closing price values the individual holdings of the exchange's 297 members at £2.2m, far below the £3.5m some were predicting.

Private-client brokers, who were seen as most likely to sell, were advised last week to hold on until after LSE members vote on the merger with Frankfurt on 14 September. There had been speculation that the big US investment houses who are pushing for the merger would buy up loose stock to improve the chances of getting the necessary 75 per cent majority to get the merger through.

Don Cruickshank, LSE chairman, has also been keen to encourage the idea that technology groups supportive of his idea of turning iX into a trading platform for B2B exchanges would move in to pick stock.

With the exchange's shares now quoted, attention is expected to shift towards issues such as regulation and clearing.

CrestCo and the London Clearing House yesterday sought to pre-empt sensitive negotiations with the Germans about clearing by setting a low cost charge of 20p per trade for pan-European share clearing irrespective of trading platform.

The announcement, ahead of next February's launch by London's key settlement and clearing organisations of a central counterparty facility for all pan-European trading platforms, is intended to put down a marker ahead of talks on the arrangements for a central counterparty to accompany London and Frankfurt's iX merger deal.

Clearing and settlement has emerged as key issues on which the campaign to get UK brokers fully behind the merger will be fought. Clearnet, the central counterparty owned by the Paris Bourse, the prime mover behind the rival Euronext grouping, charges a percentage of total value capped at 18 euros per trade. Officials from the London and Frankfurt bourses said last week that the LCH in London and Eurex in Frankfurt were working on plans for a pan-European cash equity central counterparty and that initially they would be operating side by side.

Eurex has a central counterparty facility for futures but, LCH and CrestCo say, will struggle to get its own cross-border central counterparty for cash equity trades up and running as promised before the end of 2001.