STOCK MARKET WEEK : Stock Exchange is tempting fate on the anniversary of the Big Bang

Next month, as memories of the 1987 crash haunt the stock market, there will be a dramatic upheaval in the way blue-chip shares are traded.

On the anniversary of the market's worst meltdown, which wiped billions of pounds from shares and prompted many to worry whether capitalism had been dealt a mortal blow, the Stock Exchange is tempting fate by introducing order-driven trading, as opposed to quote-driven, for the 100 blue chips making up Footsie.

The constituents of the supporting FTSE 250 index will quickly be dragooned into the new style of trading, which represents a victory for the big American investment houses over what is left of the City old guard.

It is predicted that chaos will greet the arrival of the new order. To get dealers up and running weekend instruction sessions are being held. The first took place yesterday.

But such a revolutionary switch is, by its very nature, accident prone. Major market changes rarely go through smoothly. It seems impossible to find a trader who is not apprehensive about the first few weeks of order- driven trading. There are complaints that once a trade is punched into the system there is absolutely no opportunity to take remedial action. And cock-ups could prove hideously expensive.

Vast sums of money have been expended gearing up for the change which is seen in many quarters as the biggest upheaval since Big Bang 11 years ago when eyeball-to- eyeball trading ended with the closure of the traditional Stock Exchange floor.

Big Bang destroyed the old stock market. Following the subsequent crash there were massive rounds of redundancies. There are fears that even if equities continue their long bull run, order-driven trading will lead to more job losses and kill much of the personal contact trading which has survived despite the advent of screen dealing.

It could end the power of the big market-makers, many of whom might soon be surplus to requirements.

Under the present quote-driven system they make a market in shares, enjoying a profitable gap between buying and selling prices. The order- driven system leaves them in limbo. Potential share trades are computerised, displayed on an order book. They sit there until they can be fully or partly matched.

The cost of dealing under the new system has yet to be decided. The Stock Exchange is considering charges and hopes to provide details of the cost structure this week.

The quote-driven system charges have led some traders to conclude that Stock Exchange costs will be higher than Tradepoint Financial, the stock market in miniature which has been striving to become a dealing force.

Tradepoint, which already offers an order-driven system, should benefit from the Stock Exchange's conversion.

Whether it will retain the perceived price advantage will not be known until the cost of Stock Exchange deals is set.

Still, talk that it could have a dealing advantage has been good for Tradepoint shares. They are traded on AIM, the junior market which is unlikely to be coerced into order-driven trading because of its lack of liquidity. Only last month Tradepoint shares were bumping along at a 65p low with the company's future in question. Then came a pounds 11.4m rescue package with a group of venture capitalists bankrolling the company, which lost pounds 6m in the year to end March. Its shares ended last week at 116p; last year they touched 180.5p.

Compared with the Stock Exchange, Tradepoint is a veritable tiddler. In July it handled pounds 30.8m of trade while the Stock Exchange accounted for pounds 221bn.

Order-driven trading must hasten the arrival of tiered stock markets to accommodate institutions and smaller investors and, indeed, smaller companies.

The requirements of the top 350 companies and those on the undercard are vastly different. And, of course, the needs of institutional investors and private players are poles apart.

Brian Winterflood of small company jobber Winterflood Securities has suggested segmentation of listed shares. He favours three categories - a big board 350, then what could be called a National Market made up of the 1,750 smaller companies with full listings, and then AIM. It could be argued that in investment terms a two-tiered market is already evolving with the gap between the way big and small investors are treated yawning wider by the week.

There is a plethora of profit announcements this week. Norwich Union, the insurer expected to be voted into Footsie this month, makes its maiden announcement on Wednesday with interim operating profits of pounds 311m expected.

Centrica, once part of British Gas, is another offering first-time results. The gas distributor is likely to offer an interim net income figure on Thursday of around pounds 40m.

British Aerospace and BTR also appear on Thursday with the aircraft maker expected to enjoy a pounds 100m interim lift-off to pounds 295m and BTR, still in the restructuring throes, likely to manage a much more pedestrian pounds 545m against pounds 605m.

Other heavyweights with interim figures include Blue Circle Industries (pounds 144m against pounds 116.3m expected); Caradon (pounds 76m against pounds 81.3m); and Williams (pounds 123.5m against pounds 114.1m). Then there is United News & Media (pounds 153m versus pounds 151.9m); Legal & General (pounds 168m, up from pounds 134.3m) and Rio Tinto (pounds 355m, down from pounds 361m).

Enterprise Oil, with net income probably down from pounds 73.8m to pounds 63m, is also on the reporting schedule; so is one of the market's oldest takeover favourites, United Biscuits.

In days gone by United has enjoyed frenzied takeover speculation. But a bidder has failed to surface and United's shares have been dunked down to as low as 196p. They are now 208p against a peak of 434p three years ago. Interim results on Thursday are unlikely to offer any encouragement - the market is looking for pounds 32m against pounds 44.9m last time.

News
news

Emergency call 'started off dumb, but got pretty serious'

News
people

Britain First criticised for using actress's memory to draw attention to their 'hate-filled home page'

Arts and Entertainment
JK Rowling is releasing a new Harry Potter story about Dolores Umbridge
booksJK Rowling to publish new story set in wizard's world for Halloween
Arts and Entertainment
Benedict Cumberbatch has refused to deny his involvement in the upcoming new Star Wars film
filmBenedict Cumberbatch reignites those Star Wars rumours
PROMOTED VIDEO
News
Russell Brand was in typically combative form during his promotional interview with Newsnight's Evan Davis
people

Thought you'd seen it all after the Jeremy Paxman interview?

Arts and Entertainment
On The Apprentice, “serious” left the room many moons ago and yet still we watch
tv

Greatest mystery about the hit BBC1 show is how it continues to be made at all, writes Grace Dent

News
i100
Life and Style
tech

Voices
Funds raised from the sale of poppies help the members of the armed forces with financial difficulties
voicesLindsey German: The best way of protecting soldiers is to stop sending them into conflicts
Arts and Entertainment
A scene from David Ayer's 'Fury'
film

"History is violent," says the US Army tank commander Don "Wardaddy" Collier

News
ebooksAn unforgettable anthology of contemporary reportage
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

Data Analyst/Planning and Performance – Surrey – Up to £35k

£30000 - £35000 Per Annum plus excellent benefits: Clearwater People Solutions...

IT Systems Business Analyst - Watford - £28k + bonus + benefits

£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...

Markit EDM (CADIS) Developer

£50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

CTO / Chief Technology Officer

£100 - 125k: Guru Careers: A CTO / Chief Technology Officer is needed to join ...

Day In a Page

Wilko Johnson, now the bad news: musician splits with manager after police investigate assault claims

Wilko Johnson, now the bad news

Former Dr Feelgood splits with manager after police investigate assault claims
Mark Udall: The Democrat Senator with a fight on his hands ahead of the US midterm elections

Mark Udall: The Democrat Senator with a fight on his hands

The Senator for Colorado is for gay rights, for abortion rights – and in the Republicans’ sights as they threaten to take control of the Senate next month
New discoveries show more contact between far-flung prehistoric humans than had been thought

New discoveries show more contact between far-flung prehistoric humans than had been thought

Evidence found of contact between Easter Islanders and South America
Cerys Matthews reveals how her uncle taped 150 interviews for a biography of Dylan Thomas

Cerys Matthews on Dylan Thomas

The singer reveals how her uncle taped 150 interviews for a biography of the famous Welsh poet
DIY is not fun and we've finally realised this as a nation

Homebase closures: 'DIY is not fun'

Homebase has announced the closure of one in four of its stores. Nick Harding, who never did know his awl from his elbow, is glad to see the back of DIY
The Battle of the Five Armies: Air New Zealand releases new Hobbit-inspired in-flight video

Air New Zealand's wizard in-flight video

The airline has released a new Hobbit-inspired clip dubbed "The most epic safety video ever made"
Pumpkin spice is the flavour of the month - but can you stomach the sweetness?

Pumpkin spice is the flavour of the month

The combination of cinnamon, clove, nutmeg (and no actual pumpkin), now flavours everything from lattes to cream cheese in the US
11 best sonic skincare brushes

11 best sonic skincare brushes

Forget the flannel - take skincare to the next level by using your favourite cleanser with a sonic facial brush
Paul Scholes column: I'm not worried about Manchester United's defence - Chelsea test can be the making of Phil Jones and Marcos Rojo

Paul Scholes column

I'm not worried about Manchester United's defence - Chelsea test can be the making of Jones and Rojo
Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

Frank Warren: Boxing has its problems but in all my time I've never seen a crooked fight

While other sports are stalked by corruption, we are an easy target for the critics
Jamie Roberts exclusive interview: 'I'm a man of my word – I'll stay in Paris'

Jamie Roberts: 'I'm a man of my word – I'll stay in Paris'

Wales centre says he’s not coming home but is looking to establish himself at Racing Métro
How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?

A crime that reveals London's dark heart

How could three tourists have been battered within an inch of their lives by a burglar in a plush London hotel?
Meet 'Porridge' and 'Vampire': Chinese state TV is offering advice for citizens picking a Western moniker

Lost in translation: Western monikers

Chinese state TV is offering advice for citizens picking a Western moniker. Simon Usborne, who met a 'Porridge' and a 'Vampire' while in China, can see the problem
Handy hacks that make life easier: New book reveals how to rid your inbox of spam, protect your passwords and amplify your iPhone

Handy hacks that make life easier

New book reveals how to rid your email inbox of spam, protect your passwords and amplify your iPhone with a loo-roll
KidZania lets children try their hands at being a firefighter, doctor or factory worker for the day

KidZania: It's a small world

The new 'educational entertainment experience' in London's Shepherd's Bush will allow children to try out the jobs that are usually undertaken by adults, including firefighter, doctor or factory worker