London Stock Exchange To Launch Electronic Shareholding Scheme

The London Stock Exchange today announced a new scheme that will make it easier for its shareholders to hold their shares electronically. Due to coincide with its planned listing in July and reflecting its desire to move towards a fully electronic register in its shares, the Exchange has decided to waive the annual service fee for investors holding shares in the company.

As part of a wider promotion of electronic shareholding, the Exchange intends to make the service available to private investors in the shares of other companies. The Exchange is offering this service as part of its commitment to greater capital market efficiency.

The new service is designed to appeal principally to retail investors who currently hold paper certificates, which can be both slow and costly to process. The Exchange will act as an independent sponsor for private investors to be Personal Members of CREST, the UK's electronic settlement system. Investors using the service will be free to deal with a choice of brokers whilst retaining the full rights and benefits of legal ownership of their shares. The main benefits of the Exchange's new service are:

shares are held electronically;
private investors can deal on the same settlement terms as professional investors (for settlement just three days or less after trade date) - the investor no longer needs to deliver share certificates before settlement;
the Exchange will provide an internet facility, allowing investors to check their shareholdings and to submit instructions on moving stock; while
the investor remains the full legal owner, with the same rights and benefits as shareholders of paper certificates; and
the investor remains free to deal with a choice of brokers and can seek the most appropriate, possibly cheaper, level of service.

Clara Furse, Chief Executive of the London Stock Exchange said: "The London Stock Exchange is committed to removing barriers to growth in capital markets - certificated trading is clearly inefficient. We would like to see the whole market move to electronic shareholding.

"The service we intend to offer is an attractive new option for investors who currently hold paper certificates. We see this offering as entirely complementary to other industry initiatives and welcome any such measures that aim to promote greater electronic shareholding in the UK."

Angela Knight, Chief Executive of the Association of Private Client Investment Managers and Stockbrokers (APCIMS) said: "APCIMS welcomes the initiative of the Exchange in advancing the promotion of dematerialisation. We believe that embracing the electronic world will bring efficiencies to trading and settlement and so benefit all investors."

Richard Hunter, Head of Dealing Services at NatWest Stockbrokers said: "This is a very interesting spin on the current CREST Personal Members service. If ever there was a time for retail investors to take the plunge and benefit from dematerialisation - and free of charge for London Stock Exchange shares - then surely this is it."

More details of the service will be posted to shareholders and made generally available in early July.