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Wednesday, 13 September, 2000, 16:10 GMT 17:10 UK
Nasdaq 'emerges' as London partner

The US technology exchange Nasdaq is emerging from the ashes of iX as a popular choice to partner the London Stock Exchange.

Nasdaq, the world's first electronic stock market, is gaining grassroots support as a "good fit" for the LSE, which on Thursday is set to face fierce criticism from shareholders angry at the collapse of the iX plans.

Don Cruickshank, LSE chairman, faced new calls to resign on Wednesday following the exchange's withdrawal from iX, which was to have been formed by merging the LSE with its Frankfurt counterpart.

Nasdaq, which was to have been involved in iX, would bring London much-needed business acumen, an association representing 80% of firms listed on the LSE has said.

Nasdaq has also won praise from organisations including Apcims, whose members hold 30% of LSE shares.

Continuing talks

The US-based exchange, which is committed to building the world's first "truly global securities market", declined to react to the comments, but said it was continuing talks with London and Frankfurt exchanges.


"A lot of people have looked at the way Nasdaq operates and feel the commercial expertise it would bring to the partnership would be of benefit"

John Pierce, Quoted Companies' Alliance

"A lot of people have looked at the way Nasdaq operates and feel the commercial expertise it would bring to the partnership [with LSE] would be of benefit," John Pierce, chief executive of the Quoted Companies' Alliance, told BBC News Online.

"London has expertise on the financial side, and in new products. The LSE needs commercial expertise.

"With iX there was this feeling that the LSE was being sold short."

Promoting share ownership

Nasdaq, which lists US technology giants such as Microsoft, Cisco Systems and Novell, has been successful in widening the range of investors, so underpinning liquidity in stocks listed on the exchange, Mr Pierce said.


Companies listed on Nasdaq get a very good service. Nasdaq is a very good operation

Brian Mairs, Apcims

"Nasdaq has helped make share ownership much more widely accepted in the US. There is still this feeling here that share investment is for the few."

Brian Mairs, spokesman for Apcims, which represents brokers and bankers involved in private client finance, said: "Companies listed on Nasdaq get a very good service. Nasdaq is a very good operation."

Although other exchanges, including Euronext, are thought poised to bid for LSE, the incompatibility of watchdog rules made their approaches difficult to support, Mr Pierce said.

"Strong triumvirate"

A partnership between LSE, Nasdaq and Liffe, London's futures and options exchange, would be a "very strong triumvirate".

Don Cruickshank
Don Cruickshank: Calls for his resignation

"Whatever, it is the LSE, the major European stock market, which should be making the offers. It should be in the driving seat, not fending off takeover proposals," he said.

The comments come ahead of the LSE's annual meeting on Thursday, when Mr Cruickshank is expected to face calls to resign.

Brian Winterflood, a securities veteran and spokesman for a group of disgruntled LSE shareholders, said on Wednesday: "We think it is right and proper that these people who have lead us nowhere should go and they should be replaced.

"The drawback at the moment is we don't know who to replace them with."

Credibility lost

His comments followed accusations by Michael Spencer, chief executive of LSE shareholder Garban Intercapital, that Mr Cruickshank and LSE chief executive Gavin Casey "have been incompetent and their credibility is shot"

Apcims believes its members will abstain from a vote to re-elect Mr Cruickshank, and initiate "frank discussion" on the LSE's recent record. "There will be a strong message to management that they are now on probation," Mr Mairs said.

Apcims' members, based in the private client industry, are expected to back the formation of a strategy committee to guide the development of the LSE, he said.

Members of Apcims have promised "frank discussion" following the collapse of the iX deal, but are not expected to call for the removal of LSE chairman Don Cruickshank.

"On probation"

"There will be a strong message to management that they are now on probation," Mr Mairs said.

Apcims' members, based in the private client industry, are also expected to back the formation of a strategy committee to guide the development of the LSE.

Mr Pierce, who also supported the retention of LSE chairman Don Cruickshank, called for a shake-up of the exchange's board to ensure the views of smaller brokers and companies are heard.

Extra members might include Mr Winterflood who "has made some very sensible suggestions" about LSE strategy, Mr Pierce said.

Shareholders increase

The QCA, which represents LSE-listed firms ranked below 350, does not own shares in the exchange.

The number of shareholders in the LSE has doubled to more than 500 since the exchange itself was listed in July after almost 200 years of operation.

The LSE, which is facing a takeover bid by Swedish technology firm OM Gruppen, declined to comment ahead of Thursday's annual meeting.

Representatives of Apcims will on Thursday meet OM as part of a UK-wide roadshow the firm has launched to promote its bid.

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See also:

10 Sep 00 | Business
Knives out for Cruickshank
07 Sep 00 | Business
Bank shuns controversial report
31 Aug 00 | Business
Boost for stock market merger plan
07 Jun 00 | Business
Rival global exchange planned
21 Aug 00 | Business
Exchange of views
19 Jul 00 | Business
Frankfurt ponders trading breakdown
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