View from City Road: A smaller failure
Saturday 05 September 1992
Market makers have been caught by a commitment they gave two years ago that two of them would make a market in each stock. As Winterflood Securities made markets in virtually all the stocks affected, this meant one of the big firms had to stand alongside in each case. They divided up the market between them.
The measure, which was designed to stem criticism of the Stock Exchange, proved ineffective and trading volumes in smaller companies failed to pick up. As a result it has been hard to trade in many smaller stocks at posted prices.
The bulletin board, which allows dealers to tell each other what orders they have, is the exchange's latest attempt to get round the problem. So far it has proved no more effective at lifting volumes.
The failure of two measures suggests that the problem is not structural but intrinsic to the stocks themselves. In recession there is little, if any, interest in smaller companies.
The demise of market making for smaller companies will be hastened when the Stock Exchange launches its long-promised plans for splitting the market into two - the European wholesale and the national markets. The former will use market makers as now, but the latter will, initially at least, combine quote-driven with order-driven systems.
Warburg's decision puts pressure on the exchange to clarify its plans.
- 1 Kylie Jenner challenge: Bizarre lip suction device inspired by Kardashian sister goes viral
- 2 Rarest Beanie Baby bought for just £10 at car boot sale could be sold for £62,500 on eBay
- 5 Giorgio Armani criticises the way some gay men dress saying 'a man has to be a man'
If I’m being racially abused I don’t need a stranger with a saviour complex to rescue me
The only black face in the Ukip manifesto is on the page about overseas aid
Ukip is the only main political party to not address LGBT rights in its manifesto
Food banks: One million Britons will soon be using them, according to Trussell Trust
Religion isn't growing, it is becoming vigorous in its demise, says philosopher AC Grayling
BBC election debate: The one photo that summed up the whole 90-minute leaders debate
iJobs Money & Business
£30 - 35k (DOE): Guru Careers: We are seeking a Pricing Analyst with experienc...
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£21000 - £24000 per annum: Ashdown Group: The Ashdown Group has been engaged b...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, int...