It was always going to be tricky to secure support from continental bourses for a 13th stock market. Previous attempts at forming one, embodied in Euroquote, were bogged down in the mire of nationalism, and this attempt may be no more successful.
London's ability to lead negotiations was never based on its commitment to the EC, but on its massive share of European share trading. In the first quarter of last year London accounted for more than half of all trading in Dutch shares, almost a third in French shares, nearly a fifth in Spanish and more than 10 per cent in German shares. It also accounts for 90 per cent of cross-border share trading.
While this allows it to lead by example, it also puts other bourses on the defensive. Frankfurt and Paris both want 'their business back'. Given moves to a two-tier Europe, it is fair to assume that this feeling will, if anything, have strengthened.
London needs to push ahead with its two-tier market structure, and not just because the Stock Exchange wants to relieve the frustration of member firms that have been waiting for these plans far too long. The dealing system that has allowed it to build up its massive share of European business, Seaq International, is in need of updating. Insiders fear it will soon crumble, causing delays and errors and damaging London's reputation.
Whereas the original plan was for a European wholesale market that would be partly owned, regulated and managed by Continental firms and bourses, it now looks more likely that the exchange will have to go it alone. It may even have to accept that for the time being the best course is simply to update Seaq International, adding to it large domestic stocks such as ICI and Marks & Spencer.
Given that dealers in London still have faith in Seaq International, this might be the most popular choice anyway.