Magazine article American Banker

Vote Blocks Proposal to Ease Entry into London Exchange

Magazine article American Banker

Vote Blocks Proposal to Ease Entry into London Exchange

Article excerpt

LONDON -- Reform of the sterling securities markets received a major setback late Wednesday as the result of a surprise vote by members of the London Stock Exchange. The effect of the vote is to block entry of newcomers into the exchange, except via the present route of buying into existing stock exchange member firms.

The ruling has special implications for some U.S. financial firms, like Morgan Guaranty Trust Co. and Goldman, Sachs & Co., which have been building up "in house" capacity on the assumption tht a change of rules would enable them to become members of the London Stock Exchange and, as such, eligible for recognition by the Bank of England as market makers in British government stock.

The surprise vote caught the Bank of England unawares. By late Thursday, following the weekly meeting of its board known as the court of governors, the central bank was still saying only that it was studying the position. It has not, as yet, announced any change in its plans to publish on June 17 the names of those financial institutions that will receive official recognition as market makers in British government stock. On June 3, the bank said that 31 consideration." It is understood that 11 of those applications are from U.S. financial services companies, including the two mentioned above.

The blocking of entry into the London Stock Exchange -- except through acquisition of shares in existing member firms -- many cause changes in the Bank of England's plans for the new structure of the "gilt-edged" market in British government stock.

Those plans have so far been based on the assumption that the stock exchange would remain the recognized market place for gilts and that its doors would be opened to allow the entry of newcomers into the gilt-edged market.

The Bank of England's proposals, published last April, said: "The bank intends to confine its dealings to gilt-edged market makers who are stock exchange member firms. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.