Old Mutual backs calls for delay on LSE-Frankfurt merger

Old Mutual Securities, the London Stock Exchange's biggest shareholder, is backing growing calls for the vote on the merger with the Frankfurt exchange to be delayed to allow more time for consultation on thorny issues like settlement and trading systems.

Old Mutual Securities, the London Stock Exchange's biggest shareholder, is backing growing calls for the vote on the merger with the Frankfurt exchange to be delayed to allow more time for consultation on thorny issues like settlement and trading systems.

Members of APCIMS, the Association of Private Client Stockbrokers and Investment Managers, are to fly out to Frankfurt on 18 August to meet Werner Seifert, chief executive of Deutsche Börse, to discuss how Xetra, Frankfurt's dealing platform, can be adapted to UK stock market conditions.

Edmond Warner, chief executive of Old Mutual which has six of the 298 seats, said that while a merger between Europe's two largest exchanges was clearly the right way to go, he feared the iX deal was being pushed through with "undue haste".

His chief area of concern is the lack of proper debate on the merits of Xetra, when there were other systems on offer like Connect, which has been developed by Liffe, the London futures exchange.

He added that while he believed the deal would "squeak through", a stalking horse motion calling for a delay could garner serious support at the 14 September meeting. Other brokers believe Don Cruickshank, the LSE chairman, has an uphill struggle to get the 75 per cent support he needs for the merger. Some suspect he is planning to sweeten the deal by increasing the £30,000 subsidy on offerto brokers to offset the cost of the technology switch.

Support for a delay appears to be growing. Brian Winterflood, head of Winterflood Securities, and Charles Peel of Peel Hunt have publicly called for a delay, as has Apcims, the retail brokers' lobby.

This is the first sign that the idea of holding fire for two to three months appears to be gaining ground with those who broadly support the idea of London and Frankfurt merging, as against those who oppose merger on principle.

Justin Urquhart-Stewart of Barclays stockbrokers, who meets Mr Cruickshank today, said he would support a delay if it meant there would be more time to clarify the role of Nasdaq, the US technology market in the iX deal: "I want to know whether we are concentrating on the right thing, forcing a merger in Europe rather than focusing on the global picture."