Outlook: Exchange still struggling to find a role

Exchange still struggling to find a role

WHAT IS to become of the London Stock Exchange? Its once all powerful position has been on the decline ever since Big Bang in the mid-1980s, when the City's doors were opened to foreign controlled outsiders and the old cartel of jobbers and brokers was broken up.

Removal of large chunks of the stock exchange's regulatory responsibilities, plus some high profile cock-ups with technology, has added to the erosion of prestige and standing, and today the exchange is little more than a quite poorly regarded trading system and a more highly respected set of listing requirements.

In a globalising economy, even those positions are under threat. Overseas exchanges offer an increasingly attractive alternative, both to investors and companies wishing to list. The Internet and the growth of rival electronic exchanges pose an even more potent challenge. Traditional national exchanges find themselves under siege as never before.

A whole new line of assault is opened up today with news of a joint venture between Barclays Global Investors and Mercury Asset Management to develop the market in so called "crossing" share transactions. This is a long established and already much used form of trading where brokers and the stock exchange are by passed through direct trading, either institution to institution, or more usually client to client within a fund management group.

Mercury and Barclays plan to develop "crossing" techniques beyond their present bilateral basis into a multilateral system. Trades will continue to be reported to the stock exchange, but in most other respects the stock exchange will not be involved.

By removing the middle man as well as the spread between buy and sell prices, the sponsors anticipate quite considerable cost savings for clients. Traditional agency brokers will be as worried by these developments as the stock exchange, for it plainly obviates their position in stock trading as well.

Combine this revolution in the wholesale market with the impact Internet trading is having among retail investors, and the stock exchange may find itself squeezed out altogether.

Even the purpose of the listing requirements - perhaps the stock exchange's biggest remaining raison d'etre - is open to question in a world where unprofitable internet companies with less than a year's track record to show for their sins are able to command 40 per cent premiums in first dealings.

It's easy to see why Gavin Casey, chief executive of the London Stock Exchange, is so keen to accelerate defensive plans for a pan European stock market. While these talks were confined to a get together with the Deutsche Borse, they seemed credible enough.

Now that they have been extended to embrace other Continental exchanges too, they are a good deal less so. The way things are going, Europe's traditional stock exchanges will all be dead by the time they get through the talking.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones