The Irish stockbroking firms which are members of the London Stock Exchange are in line for a windfall of about £1 million sterling (€1.6 million) each, if the 289 member firms of the London Stock Exchange vote in favour of a demutualisation proposal at a special meeting on March 15th.

The exchange is proposing to convert to a public limited company. If this proposal is approved, each member firm will receive an allocation of 100,000 shares irrespective of the member firm's size and volume of business it transacts on the exchange.

London, however, is not going all the way towards becoming a plc and shares issued to member firms can be traded on an internal market operated by stockbroker Cazenove. Member firms will be able to buy additional shares, but no one organisation will be allowed to own more than 4.9 per cent of the plc.

Given the exchange's pre-tax profits of £17.5 million sterling last year, analysts are forecasting a valuation of around £350 million sterling, with each allocation of 100,000 shares being worth around £1 million sterling.

The Irish firms which will benefit include all the major stockbroking houses, including bank-controlled brokers such as Davy, Goodbody, NCB and ABN-Amro (Ireland). While the £1 million will be a drop in the ocean for the bigger institutional firms, it will be a welcome injection of capital for the smaller brokers. These include BCP, Bloxham, Campbell O'Connor, Dolmen Butler Briscoe, Fexco and W & R Morrogh.

Others who will benefit include Garban Ireland, which acts as the inter-dealer broker between the market-makers in Government bonds, IIU Stockbrokers, the offshoot of Dermot Desmond's IIU group and AIB Corporate Finance, which has a London exchange membership separate from that held by AIB's broking subsidiary, Goodbody.

One broker, however, will lose out. Merrion Capital obtained its membership of the exchange after the demutualisation was first mooted by the exchange's board and does not qualify.