Stock Exchange urged to float as a company

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The Independent Online
The Commons Treasury Committee urged the London Stock Exchange yesterday to ditch its co-operative ownership structure in favour of floating as a company.

MPs believe that it will only push fully ahead with the introduction of American-style order-driven share trading when the whole of the stock market is represented on the Exchange.

At the moment the Exchange's board is still dominated by London market- making and broking firms, which stand to lose the most when the City sheds its traditional quote-driven share trading system. This will start in October with order-driven trading in the FTSE 100 stocks.

The Treasury Committee's report, its fifth into the Exchange, concludes: "We can see no reason why the Stock Exchange should now not develop a corporate structure." Yet it was the very introduction of order-driven trading which the Exchange used yesterday as its justification for not considering a float this year.

A spokesperson for the Exchange, when asked about converting to company status, said: "We do keep ownership and governance issues under review all the time. But we have a very heavy programme this year, especially with the introduction of order-driven [trading] this October ... So although we always keep these things under review, we wouldn't be expecting to be making any other major changes this year."

The spokesperson also drew attention to part of the MP's report which conceded: "There is no `right' answer about the most appropriate ownership structure to yield the optimal market, regulatory and public interest outcome."As for next year or later, the spokesperson said: "We have nothing further to say at the moment."

The impending upheaval in the way the City trades shares follows close on the introduction of Crest, the automated share settlement system.