The service will work in a straightforward way. Market makers will maintain prices in international stocks which will be distributed by the Exchange amongst its worldwide network of terminals. As a fully electronic trading service, member firms will be able to execute trades automatically against the market makers' prices, which will be set at a minimum size targeted towards retail business.
A number of firms, including Credit Suisse First Boston, Merrill Lynch International and Peel Hunt plc have already signed letters of intent with the Exchange to act as market makers in the service. These firms intend to participate from the launch date, planned for March 2001. The Exchange expects further market makers to sign-up before this date.
The aim is for the service to include, but not be limited to, the Eurotop 300 -the most liquid securities in Europe. The move will be a significant step in satisfying the increasing demand among private investors to trade international securities with ease and in a regulated marketplace. Trades completed through the service will be eligible for settlement through CREST, which provides low-cost custody support for international securities. This will reduce the cost of cross-border trading for private client brokers who only pay a domestic tariff for the settlement of international securities within CREST.
The development of this service is part of a programme of initiatives that aim to internationalise the Exchange's markets and deliver on recent commitments made to the retail broking community.
Commenting on the proposed service, Chris Ring, Managing Director of NatWest Stockbrokers, said: "This service addresses the increasing demand from private investors to access a wider choice of non-UK equities. It provides a competitively priced solution for dealing and for settlement through CREST. There are also significant benefits of having prices quoted in sterling and trading taking place within the London Stock Exchange's regulatory framework."
Paul Killik of Killik & Co, said: "The development is evidence that the Exchange is listening to its customers and improving access to the international markets. It is an important step forward in meeting the needs of the retail broker community."
Chris Broad, Head of Broker Services, London Stock Exchange, remarked: "Having listened carefully to the broking community, we feel confident that this service - providing visibility to over 100,000 terminals worldwide and supported by London regulated member firms - will offer a solution of benefit to retail investors."
Hugh Simpson, Business Development Director of CRESTCo said "This new trading service together with efficient, low-cost settlement in CREST make an exciting combination. It realises the vision of making it as cheap and simple to trade European equities in London as it already is for UK equities."
