LSE cuts listing fees by a quarter

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The London Stock Exchange said yesterday it would cut its annual listing fees by an average of 25 per cent to put to an end an investigation by competition authorities.

The climbdown comes after a lengthy investigation by the Office of Fair Trading, which began probing the LSE last year after it increased fees by up to 85 per cent. The LSE yesterday said it had reached an agreement with the OFT that meant the rise in annual "issuer fees", the admission and subsequent annual fees charged to listed companies to use the exchange, would be reduced to 35 per cent.

The annual fees for a company listed on the main British market will fall by more than 25 per cent from April next year. Smaller companies will see the biggest cuts, up to 39 per cent for those with a market capitalisation of less than £50m.

Companies quoted on the junior AIM market will pay an annual flat fee of £4,000 from April next year, down from £5,125.

The LSE said yesterday that, had it brought in the fee reductions for the year to the end of March 2003, it would have lost £5.8m in revenue.

Martin Wheatley, the deputy chief executive of the LSE, said: "Whilst the exchange does not agree with the OFT's conclusions, it believes the swift and definitive resolution to this matter is in the best interests of customers and shareholders."

The LSE has also agreed not to significantly raise its annual main market fees for two years. The OFT said yesterday: "In view of the LSE's agreement to reduce its fees, the OFT will conclude its investigation with a finding that the LSE's increase in fees does not have a significantly adverse effect on competition."

Shares in LSE yesterday closed down 4.5p at 351.5p, as analysts saw the price cuts as negative for the exchange. "There will clearly be limited scope for tariff increases in any of the other major revenue streams," analysts at Merrill Lynch said yesterday.

The cut in fees follows a deal struck by the LSE with the London Clearing House this week. The exchange had threatened to take its business elsewhere, and LCH agreed to reduce its clearing costs by 25 per cent. LCH yesterday agreed to a merger with Clearnet, the clearing arm of the European exchange Euronext.