LSE puts case for `radical' approach to single bourse

A purely co-operative approach between stock exchanges can't deliver the single pan-European bourse that the market now wants, the head of business development at the London Stock Exchange (LSE) has said.

Mr Martin Wheatley, in Dublin to visit the LSE's Irish members ahead of a key vote on demutualisation later this month, said that people now want something radical, along the lines of a single European market for bluechip stocks, and they want it quickly.

"A co-operative structure can't deliver that," he said. "We don't believe that it's the way to go."

His comments follow a report that the Deutsche Boerse, which, along with the LSE, is one of the most influential members of an alliance of eight European stock exchanges, is frustrated with its lack of progress and is considering withdrawal.

The alliance - which also includes the Amsterdam, Brussels, Madrid, Milan, Paris and Zurich exchanges - is working on integrating the trading systems of its members, but has made little headway to date.

The LSE believes that becoming a public limited company will put it in a position where it can go about meeting the changing needs of the European marketplace. It is prepared to talk to anybody, Mr Wheatley says, and would not rule anybody out as a partner, including US exchanges.

The LSE's 289 members, which include all the major Irish stockbroking houses, are due to vote at a special meeting on March 15th on its proposals to convert to a public limited company. If approved, each member firm will receive an allocation of 100,000 shares, expected to be worth around £1 million sterling (€1.6 million), irrespective of its size or the volume of business it transacts on the exchange.

Mr Wheatley said the LSE was now operating in a more competitive world and becoming a public limited company would help it do that more effectively.

However, the LSE is not going all the way toward becoming a plc and shares issued to member firms can be traded on an internal market operated by stockbroker Cazenove. No single organisation will be allowed to own more than 4.9 per cent of the plc.

Mr Wheatley said the LSE decided against moving to full plc status in one fell swoop because it would have been "too big a step in one go". The current proposal provides it with transition time to move from the mutual structure which has been in place for the last 240 years.

Asked if he was concerned that Irish technology companies were bypassing the Dublin and London markets in favour of listings on the Nasdaq or Germany's Neuer Markt, Mr Wheatley pointed to the LSE's new market for technology stocks, Techmark, which it introduced last November.