Newspaper article The Evening Standard (London, England)

LSE Bid to Tighten Price Deals on Leading Shares

Newspaper article The Evening Standard (London, England)

LSE Bid to Tighten Price Deals on Leading Shares

Article excerpt

Byline: MICKEY CLARK

THE London Stock Exchange wants to halve the spread between bid andoffer on some leading shares in its order-driven trading system. That was thestory doing the rounds in the Square Mile today.

The stocks chosen are expected to include supermarkets chain Tesco, up 10.5p at428.25p, mobile phones operator Vodafone, 1.8p dearer at 160.3p, oil giant BP,4.5p better at 617.5p, HSBC bank, 13p dearer at 884p, and drugmakerGlaxo-SmithKline, 3p better at 1123p.

The LSE argues that these stocks already spend 80% of their time trading withinthe current tick range, and that a move to reduce the tick further willincrease competition among dealers and result in better prices for investors.But member firms are not so sure.

They say the gap between bid and offer is already consistently tight, with fewexamples of gapping out during periods of market volatility. Some traders arebemused by the move, and say the only beneficiary will be the LSE, which willachieve bigger rev-enue flows as traders struggle to com-plete orders intighter markets.

At present, the LSE receives a com-mission every time a parcel of shares isbought or sold. The spread on, say, Vodafone is just 0.1p at the moment. Underthe LSE proposals, that will halve to 0.05p. In the case of Tesco, the tick is0.25p, and will drop to 0.1p.

The LSE plans to discuss the move with member firms over the next few weeks.One of the most volatile stocks among the top 100 companies these Download theviews of our stock market commentator on the days action. Go to:standard.co.uk/citypod days is, strangely enoughthe LSE itself. Today it was up 11p at 1082p.

Trading in London was lacklustre despite impressive first-quarter profits fromanother oil company, BG. Even so, the shares ran into profit-taking, losing 65pat 1243p. Home Retail, the Argos and Homebase retailer, was rewarded with arise of 221#2p to 2651#4p on the back of strong numbers, as was satellitebroadcaster BSkyB, up 41#2p at 545p. …

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