The Week Ahead: Easdaq makes strides using outmoded quote-driven system

As the Stock Exchange prepares for next month's order-driven share trading revolution, a fledgling computerised rival, Easdaq, makes headway using the near-redundant quote-driven system.

Easdaq, still little known, is, in effect, the European version of Nasdaq, the highly successful US computerised market famous for its Bill Gates involvement. Like John Jenkins' fringe Ofex market, Easdaq was created as a result of Exchange rationalisation.

It was born out of the study which followed the decision to kill the old Unlisted Securities Market. The time was then ripe, says Easdaq's chairman, Stanislas Yassukovich, former head of Merrill Lynch's European operations, to launch a market "dedicated to entrepreneurial, high-growth companies with pan-European business aspirations". Its dream is to find another Bill Gates-like Microsoft giant.

The market made its debut nearly a year ago. First recruit was a British company, Dr Solomon's, producing anti-virus software products. There are now 15 constituents with Debonair, the airline, joining Dr Solomon's as the British contribution.

Companies are traded in the currency of their choice. Dr Solomon's opted for US dollars; Debonair for sterling. Value of the market is near to $3.35bn. Turnover so far clocked up is around $650m.

Shares of Dr Solomon's and Debonair have performed well. The computer virus group was floated at $17 and closed at $25.75 on Friday; Debonair arrived at 450p; it stood at 620p at the end of the week.

Other constituents include Esprit Telecomes, trading in Austrian schillings; Chemunex, a French biotech business which has attracted a buy recommendation from Nomura; and Topcall, another Austrian player, which has also won a London buy accolade - from Credit Lyonnais Laing.

Easdaq has an array of shareholders, none with substantial stakes. They range from Nasdaq, with around 4 per cent, the UBS securities giant, stockbroker Beeson Gregory and former Tory defence minister Sir John Nott.

The Exchange's order-driven system is due to be launched on 20 October, uncomfortably close, for some, to the anniversary of the 1987 crash. Trading will be confined to the 100 Footsie constituents. The shares in the supporting FTSE 250 index will be pulled in as soon as possible. In order-driven trading potential deals are computerised and displayed on an order book. They remain there until they can be fully or partly matched or withdrawn.

Quote-driven trading, which the Exchange seems likely to preserve for the 1,750 shares outside the top 350 as well as AIM shares, is the system adopted by Easdaq.

At least two market-makers must be prepared to deal in an Easdaq stock. They enter buying and selling prices on the market's trading terminals.

Says Easdaq: "Competition among market-makers produces efficient pricing and provides the market with the capacity to absorb large increases in volume without trading halts."

So far Easdaq has concentrated on institutional trades. It admits it has yet to come to terms with accommodating the private investor, but it seems to appreciate the need to cater for the small player and is likely to pay more attention as the market gathers pace and strength.

It is, however, possible for private investors to deal. And they do. They have to operate through their stockbroker who, if not an Easdaq member, has to put the order through one who, in turn, will trade with the market- makers. Cost of a small deal, say pounds 1,300, would be about pounds 30.

The Euro market does not see itself as a rival to "small-cap" markets such as AIM or the Nouveau Marche. In the fullness of time it could, however, emerge as a serious challenger to the Exchange and other big European markets (there are more than 20). It is modelled on the US Nasdaq market which from a small, slow start mushroomed into a market with a $17bn-a- day turnover, and happy to splash out $10m on a British television campaign.

Of course Easdaq does not, at least at this stage in its development, see itself rivalling national share markets. Still existing markets are largely composed of mature companies and Easdaq hopes it can steal their thunder by aiming to collect high-growth, entrepreneurial businesses - the companies of tomorrow.

As well as facing predictable and possibly fierce resistance from the more alive entrenched markets, it is having to contend with another European venture, Euro-NM, which covers Belgian, Dutch. French and German markets. But Easdaq's main challenge could come from its very inspiration, Nasdaq. On Sunday it launches another $10m television advertising campaign aimed at attracting British private investors. It is in talks with ShareLink and NatWest Securities.

If the Nasdaq campaign goes according to plan it will then be extended to Europe - a daunting prospect for existing markets.

Meanwhile, Manchester United is expected to announce its new television role when it produces year's figures tomorrow. It should score profits around pounds 27m, up from pounds 14.5m. The week's big hitter is Bank of Scotland, likely to offer pounds 357m against pounds 324m on Wednesday.

Engineer McKechnie should produce year's results of pounds 54.8m (pounds 50.3m) today.Northern Leisure should dance in with pounds 8.5m.

Suggested Topics
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

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45,000: SThree: SThree Group have been well e...

Ashdown Group: IT Manager / Development Manager - NW London - £58k + 15% bonus

£50000 - £667000 per annum + excellent benefits : Ashdown Group: IT Manager / ...

Recruitment Genius: Sales Consultant / Telemarketer - OTE £20,000

£13000 - £20000 per annum: Recruitment Genius: Scotland's leading life insuran...

Ashdown Group: Training Programme Manager - City, London

£40000 - £45000 per annum + benefits : Ashdown Group: Training Programme Manag...

Day In a Page

Where the spooks get their coffee fix: The busiest Starbucks in the US is also the most secretive

The secret CIA Starbucks

The coffee shop is deep inside the agency's forested Virginia compound
Revealed: How the Establishment closed ranks over fallout from Loch Ness Monster 'sighting'

How the Establishment closed ranks over fallout from Nessie 'sighting'

The Natural History Museum's chief scientist was dismissed for declaring he had found the monster
One million Britons using food banks, according to Trussell Trust

One million Britons using food banks

Huge surge in number of families dependent on emergency food aid
Excavation at Italian cafe to fix rising damp unearths 2,500 years of history in 3,000 amazing objects

2,500 years of history in 3,000 amazing objects

Excavation at Italian cafe to fix rising damp unearths trove
The Hubble Space Telescope's amazing journey, 25 years on

The Hubble Space Telescope's amazing journey 25 years on

The space telescope was seen as a costly flop on its first release
Did Conservative peer Lord Ashcroft quit the House of Lords to become a non-dom?

Did Lord Ashcroft quit the House of Lords to become a non-dom?

A document seen by The Independent shows that a week after he resigned from the Lords he sold 350,000 shares in an American company - netting him $11.2m
Apple's ethnic emojis are being used to make racist comments on social media

Ethnic emojis used in racist comments

They were intended to promote harmony, but have achieved the opposite
Sir Kenneth Branagh interview: 'My bones are in the theatre'

Sir Kenneth Branagh: 'My bones are in the theatre'

The actor-turned-director’s new company will stage five plays from October – including works by Shakespeare and John Osborne
The sloth is now the face (and furry body) of three big advertising campaigns

The sloth is the face of three ad campaigns

Priya Elan discovers why slow and sleepy wins the race for brands in need of a new image
How to run a restaurant: As two newbies discovered, there's more to it than good food

How to run a restaurant

As two newbies discovered, there's more to it than good food
Record Store Day: Remembering an era when buying and selling discs were labours of love

Record Store Day: The vinyl countdown

For Lois Pryce, working in a record shop was a dream job - until the bean counters ruined it
Usher, Mary J Blige and Will.i.am to give free concert as part of the Global Poverty Project

Mary J Blige and Will.i.am to give free concert

The concert in Washington is part of the Global Citizen project, which aims to encourage young people to donate to charity
10 best tote bags

Accessorise with a stylish shopper this spring: 10 best tote bags

We find carriers with room for all your essentials (and a bit more)
Paul Scholes column: I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England

Paul Scholes column

I hear Manchester City are closing on Pep Guardiola for next summer – but I'd also love to see Jürgen Klopp managing in England
Jessica Ennis-Hill: 'I just want to give it my best shot'

Jessica Ennis-Hill: 'I just want to give it my best shot'

The heptathlete has gone from the toast of the nation to being a sleep-deprived mum - but she’s ready to compete again. She just doesn't know how well she'll do...