Sluggish start to new era of share dealing

JOHN EISENHAMMER

Financial Editor

The new era in share trading in the City has got off to a sluggish start. Capping a poor fortnight, Tradepoint, the new automatic order-driven exchange, managed just one trade yesterday. The London Stock Exchange registered 27,893.

Domestic market makers appear largely to be adopting a wait-and-watch approach to the newcomer, which anonymously matches buy and sell orders.

Most of the firms using the exchange, which has broken the Stock Exchange's 200 year monopoly by introducing to London the order-driven facility common in most other big financial centres, are believed to be international investors.

A senior fund manager described Tradepoint's start as a "dripping squib". Of the 42 companies signed up, including many of the City's most powerful market makers and a few institutional giants, about 10 are believed to be actively trading.

"The rest are just making sure they are not missing out on anything," said one institution.

"We intend to use Tradepoint reactively, not pro-actively. If it does take off, we can always think again,' said one head of market making. "We'll let it run for six months, watch the volume."

"Let's see what others are doing, not what we can do to make the system a success," said another.

The average daily number of trades on Tradepoint, which began on 21 September, has been around 15. Last Monday the Stock Exchange changed its rules to allow members to quote competitive prices on rival exchanges, lifting the main obstacle to Tradepoint's aim of offering cheaper dealing.

Stephen Wilson, Tradepoint's executive director, said the slow start was expected. "It will take time for liquidity to build, and we are connecting new participants all the time," he said.

The pricing structure of Tradepoint is geared to institutions, and it is essential it wins their custom if it is to meet the target of gaining 2 per cent of the UK equity market next year.

"The average trade size has been institutional, around pounds 100,000, and we have got a lot of institutional orders going through. They are actively participating," said Mr Wilson.

But many market makers see Tradepoint as a competitor. "It gives clients direct access to one another, so it is hardly in our interest," said one. "We risk losing relationships, and the benefits of being able to sell other products. We signed up to monitor the competition, not to use it," said another.

Institutions complained settlement procedures are not straightforward and involve putting up collateral at the London Clearing House.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Guru Careers: Stockbroker

£Basic (OTE) + Uncapped Commission: Guru Careers: A Stockbroker (qualified / p...

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence