Share revolution provokes deep City split

Stock Exchange members are still a long way from agreeing on how equity trading in London should change. Some still want no change, reports John Eisenhammer

The London Stock Exchange yesterday revealed for the first time details of the deep rifts between members in the 190 responses it received in the biggest consultation exercise in its 200-year history. At the centre of the controversy is the proposed revolution in the way shares are traded in the City.

Strong opposition to any change in trading methods has come from expected quarters, including some of the City's leading market makers such as BZW.

"Although the (consultation) document presents three options for change a fourth option, no change, is omitted and is the one which we would choose. BZW remains wholly supportive of, and committed to, the quote-based means of trading that continues to underpin the strength of London's equity market," it wrote.

An influential body of institutions, including such names as Commercial Union and Invesco, also expressed strong reservations about the need for abandoning the traditional London method of trading by market makers quoting firm buy and sell prices.

But a majority of responses, from both brokers and institutions, show varying degrees of support for an electronic system which automatically matches buy and sell orders. James Capel said "no change" was not an option. "The Exchange must move to a full public order book in all UK equities with block trading around it," it wrote.

Big institutions such as Mercury Asset Management, PDFM and Standard Life said the switch to an order-driven system would not harm liquidity. "We believe that an order matching system with block trading would give greater transparency and hence comfort to market participants," wrote Standard Life.

BP Investments wrote: "To attract overseas funds into the London market, I believe we need a fully order-driven, specialist system with block trading based on the New York Stock Exchange."

This support is reinforced by a further group which, despite its scepticism, accepts that change is inevitable because of regulatory and international pressures.

"While our strong preference is for the current structure of the Exchange's price-driven system to remain as present ... we assume that changes to the present system are inevitable," said Societe Generale Strauss Turnbull.

Even among supporters, the responses betray considerable concern at the lack of detail about costs. "The consultative document offers no details on the costs of the system to the users. Obviously, we would need to know what the fixed and volume-based costs of the service will be before we can fully assess the impact of the new service on our operations," wrote Albert E Sharp, which broadly supports change.

There is also a widespread wish for the introduction of what amounts to a radical switch in the City's dealing culture to be evolutionary rather than revolutionary. Most respondents said they will need more time, once the detailed rules are published, to make the technology changes, so a start-up is likely to be delayed well into next year.

APCIMS, the private client stockbroking association, urged the Exchange "not to rush into the implementation of a limit order book, and consequent market changes, when firms' attention is concentrated on Crest. Better by far to delay until 1997 when implementation will be more orderly."

In integrated houses, there was often a difference of views between the investment managers, worried about loss of immediacy in doing deals, and the broking side, more supportive of an order-driven reform. Fleming, Schroder and Kleinwort Benson offered split views. The Exchange is to put all the responses through a computer, coming up with a refined proposal to put before its board on 21 March.

Life and Style
“What is it like being a girl?” was the question on the lips of one inquisitive Reddit user this week
peopleDave Legeno, the actor who played werewolf Fenrir Greyback in the Harry Potter films, has died
Arts and Entertainment
Armando Iannucci, the creator of 'The Thick of It' says he has
tvArmando Iannucci to concentrate on US show Veep
Life and Style
Luis Suarez looks towards the crowd during the 2-1 victory over England
Life and Style
Swimsuit, £245, by Agent Provocateur

Diving in at the deep end is no excuse for shirking the style stakes

German supporters (left) and Argentina fans
world cup 2014Final gives England fans a choice between to old enemies
Arts and Entertainment
A still from the worldwide Dawn of the Planet of the Apes trailer debut
peopleMario Balotelli poses with 'shotgun' in controversial Instagram pic
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Basketball superstar LeBron James gets into his stride for the Cleveland Cavaliers
sportNBA superstar announces decision to return to Cleveland Cavaliers
Javier Mascherano of Argentina tackles Arjen Robben of the Netherlands as he attempts a shot
world cup 2014
Arts and Entertainment
The successful ITV drama Broadchurch starring David Tenant and Olivia Coleman came to an end tonight
ebookA unique anthology of reporting and analysis of a crucial period of history
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
14 March 2011: George Clooney testifies before the Senate Foreign Relations Committee during a hearing titled 'Sudan and South Sudan: Independence and Insecurity.' Clooney is co-founder of the Satellite Sentinel Project which uses private satellites to collect evidence of crimes against civilian populations in Sudan
Arts and Entertainment
Balaban is indirectly responsible for the existence of Downton Abbey, having first discovered Julian Fellowes' talents as a screenwriter
tvCast members told to lose weight after snacking on set
Life and Style
More than half of young adults have engaged in 'unwanted but consensual sexting with a committed partner,' according to research
Life and Style
A binge is classed as four or more alcoholic drinks for women and five or more for men, consumed over a roughly two-hour period
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business


£50000 - £70000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Programme Support, Coms, Bristol, £300-350p/d

£300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...

(Junior) IT Systems Administrator / Infrastructure Analyst

£28000 - £32000 per annum + pension, 25 days holiday: Ashdown Group: A highly ...

Finance Officer

Negotiable: Randstad Education Birmingham: Randstad Education are seeking a Fi...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice