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.
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
Shock poll shows voters believe Ukip is to the left of the Tories
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
New era of cheap oil 'will destroy green revolution'
Ukip founder Alan Sked and Nigel Farage 'begged Enoch Powell to stand as a candidate'
Ukip candidate jokes about 'shooting peasants' in racist and homophobic rant
iJobs Money & Business
£40000 - £470000 per annum + bonus: Ashdown Group: Java Developer / J2EE Devel...
£45000 - £55000 per annum + Benefits: Ashdown Group: An exciting opportunity h...
$125 - $175 per annum: Carlton Senior Appointments: Senior Wealth Manager In...
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...