Retail brokers urged not to sell LSE shares

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The Independent Online

Small private client stockbrokers in line for windfalls of up to £3.5m each are being urged not to rush out and sell their shares in the London Stock Exchange when trading starts on Monday.

Small private client stockbrokers in line for windfalls of up to £3.5m each are being urged not to rush out and sell their shares in the London Stock Exchange when trading starts on Monday.

Bankers have suggested that the price could reach 2,350p, valuing the exchange at over £700m. However, with little precedent on which to predict the pattern of trade, brokers expect to see the price start at closer to 1,600p and take days, if not weeks, to settle down.

Apcims, the Association of Private Client Stockbrokers which represents around a third of LSE shareholders, has written to members warning them to think carefully before selling.

Mike Jones Apcims, chairman, said: "There are a number of issues on which we need further clarification and satisfaction on and we would advise members not to rush into anything." Although there is a limit of 4.9 per cent on individual holdings, it has been speculated that enough loose stock may come on to the market to ensure the LSE gets the 75 per cent vote it needs to get the iX merger through.

Previous demutualisations of exchanges have seen spectacular gains for holders - provided they are prepared to stay on board. Shares in the Australian stock exchange rose fivefold in as many months after it demutualised, while shares in Liffe, the London futures exchange, have seen their price rise by more than 172 per cent since the exchange demutualised in April 1999.

Following the LSE's demutualisation in March, the 297 member shares have been split giving each member 100,000 shares.

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