COMPANIES INTERNATIONAL: Euronext plan for UK trades
By Norma Cohen in London
Financial Times; Mar 22, 2004
Euronext, the Paris-based stock exchange operator, has raised the stakes in the growing competition between it
and its rival, the London Stock Exchange, by announcing plans to offer trading in the biggest UK stocks on its
own platform.
The move, announced as the company unveiled full-year results on Friday, is widely viewed as an effort to
punish the LSE for launching its own low-cost offer for Dutch equities trading.
Euronext's plan to offer trading in FTSE 100-listed stocks could be the first salvo in a costly war for both
exchanges, as Europe's stock markets vie to attract increasingly cost-conscious customers. For their part, the
customers are delighted at the prospect, with the London Investment Banking Association warmly greeting
Euronext's initiative.
"Liba firmly believes in the benefits that competition can bring and [it] will be interesting to see what user benefits
Euronext offers," a Liba spokesman said.
The LSE's Dutch equities trading service has already rattled officials at Euronext, who privately described the low
tariffs as the equivalent of "dumping" of manufactured goods.
John Abbink, director of research at Van der Moolen, the Amsterdam-based proprietary traders, said he was
attracted to the London offer because of its promise of lower cost. For its part, Euronext has not announced
further price cuts, but neither has it ruled them out.
Huw van Steenis, financial services analyst at Morgan Stanley, said fee competition from London was a serious
matter for Euronext. Because it has harmonised fees across all markets in which it operates - France,
Netherlands, Belgium and Portugal - a fee cut for one is a fee cut for all.
Euronext has already cut its tariffs by27 per cent over the past two years and by a further 11.4 per cent since the
start of 2004.
But Willem Meijer, managing director of institutional broker SNS Securities, and a board member of the Dutch
brokers association, said looking only at per-trade costs obscures the true cost picture because trading
strategies have changed radically since the advent of electronic trading in 1996. Now, large orders are most
frequently chopped into smaller units to prevent a single trade from sparking a sharp share price move.
This change in trading style, Mr Meijer said, was more responsible for the pressure to cut tariffs than was the
competition from London.