LSE shareholders agree to abandon equity limits

Shareholders in the London Stock Exchange paved the way for a full listing of the exchange yesterday when they voted to abandon limits on how much of the equity they can own.

Shares in the 200-year-old exchange will start trading on its own market today, following a vote by LSE shareholders to remove a limit on any investor holding more than 4.9 per cent of the shares. The exchange will be valued at about £1.2bn, making it a FTSE 250 constituent.

The London Stock Exchange joins rival bourses such as Germany's Deutsche Börse and the Paris-Brussels exchange, Euronext, which have already sought stock market listings as individual exchanges seek greater flexibility in an increasingly cut-throat market.

The change is expected to make the LSE more vulnerable to takeover. But Don Cruickshank, the Exchange's chairman, said the LSE's performance should protect it.

"Technically, it makes us more vulnerable but, practically, it does not," he said. "We are determined there won't be a rationale for a successful takeover of this company."

The comments accompanied an encouraging trading update for the first three months of the financial year to 30 June. Mr Cruickshank said: "This has been against a backdrop of weaker new issue activity but strong secondary market activity." The number of companies floating was down to 94 from 124 in the same quarter last year with no signs of a turnaround, the Exchange said. Clara Furse, the chief executive, said the LSE had become more efficient, and now aimed to expand its share in the competitive market. "The exchange has been focusing on costs over the last few years, now we need to consider the top line," she said.

LSE shares, which have previously been traded on a matched-bargain basis, closed 25p higher at £39.75.