Meanwhile, while some fret over the future of AIM, the market formally known as Ofex, has been making waves. Next year will see the introduction of the Markets in Financial Instruments Directive – also rather catchily known as MiFID. This is the directive that will permit trades independent of a stock exchange. So, for example, Peter sells his shares in an LSE listed company to Paul, and the trade is not shown up on the London Stock Exchange. To an extent this already happens, if both Peter and Paul use the same bank, then the trade could be conducted “off book” with the stock exchange none the wiser. But the new directive could take this practice to its logical conclusion.
This directive is causing something of a hoohah. Recently, seven investment banks announced plans to offer an alternative trading platform to the existing stock exchanges, and ICAP (the world’s number one interdealer broker) has been making noises in that direction too.
Now it’s the turn of Plus Markets, the exchange that emerged like a phoenix from Ofex.
As it prepares for MiFID, it has announced plans to raise Â£25m in what some press are hailing as an attempt to create a genuine rival to the LSE. It has taken on two new directors too, former deputy chairman of the LSE, Ian Salter, and Giles Vardy, the man behind LSE’s SETS electronic trading system. There’s a plan to use the platform to offer the chance to trade shares in FTSE 100 and 250 companies too.
Ironically, the company is gunning for a listing on the LSE .
MiFID does not mean companies won’t be so keen to have a listing on the LSE, or another major European stock exchange, rather it could mean the shares will be traded independently of the exchange, and in the process dramatically undermine the LSE, as well as Euronext and Deutsche B#246;rse business models.
At this point it might be worth reminding ourselves of the comments made by Suzanne Dence of the IBM Institute for Business Value. She said: “The big question is not which exchanges are going to win or where these exchanges will be based. The real question is what will exchanges look like in 10 years’ time and will there be any need for them at all. While exchanges provide a level of unique value in providing surety about the counterpart that you are dealing with, much of the rest of their service is little more than a glorified Ebay.”
© Investment & Business News 2013