Banks reveal trading platform plans

15-11-2006

Banks reveal trading platform plans
A new trading system is to be established in Europe to facilitate share transactions, creating a rival to traditional European bourses like the London Stock Exchange.

Six major banks announced the plan today, including Citigroup, Deutsche Bank, Morgan Stanley, Goldman Sachs, Merrill Lynch, UBS and Credit Suisse.

If the new computerised system is successful existing exchanges will face greater pressure to reduce their transaction fees, which are around 80 per cent higher in Europe than they are in the US.

The banks are taking advantage of European legislation aimed at deregulating financial activity on the continent in an attempt to make investing in European businesses more attractive. The EU introduces its Markets in Financial Instruments Directive (Mifid) next year.

"We are responding to the Mifid legislation by creating an integrated pan-European trading platform where equities can be traded more cost-effectively, obtaining significant liquidity with greater efficiency for each and every participant in the equity markets," a spokesperson for the banks told the Reuters news agency.

As the six banks are together responsible for 50 per cent of trading in European businesses, commentators have suggested that if successful their initiative could attract other businesses. Many such attempts to breakaway from the traditional exchanges have failed in the past.


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