Banks to form own platform
Meanwhile, a platform to trade European stocks is being started by a host of banks in a move that threatens the London Stock Exchange.
Merril Lynch, Credit Suisse, UBS, Morgan Stanley, Goldman Sachs,Citigroup, Deutsche Bank, are behind the rival platform, which will trade European stocks.
Together, the banks account for about 50% of the volume on pan-European exchanges. The bulk of stock-exchange trading in Europe takes place on the LSE.
In a statement, the banks said they're trying to lower trading costs and promote greater transparency of prices and volume. They're searching for a management team that will be independent from the founding banks, and plan to open their platform to non-founders.
J.P. Morgan and Lehman Brothers are among the biggest names not included in the platform-creation plan.
People, cash and resources have already been committed to the project and meetings have started with European regulators, the companies said.
They said they were moved into action by the European Union's "Markets in Financial Instruments Directive," which comes into effect in November 2007.
A person familiar with the consortium got together because said the new rules from Europe will include requirements to demonstrate best execution of trades. That will force users to have systems to look at prices on different platforms.
Deutsche Boerse's Francioni said the move "was not unexpected." He said his exchange would be the least affected by the move, since German equity trades already are able to be processed without going through the Deutsche Boerse.
But that's not the same throughout Europe. Trading in Italian stocks, for instance, must go through the Borsa Italiana.
Some stocks in Europe are already traded by different exchange operators.
Deutsche Boerse and the LSE each trade Irish stocks, for instance, and Dutch stocks trade on both the Euronext and the LSE.
Virt-x, where top Swiss stocks are traded, also lists 280 pan-European companies. Instinet recently launched a platform called Chi-X to trade U.K., German and Dutch stocks. |
