THE LONDON STOCK EXCHANGE

The London Stock Exchange is positioned in the heart of a city unrivalled anywhere in the world for its spread of financial markets and its number of foreign-owned banking, financial and securities businesses.The Exchange has a dominant position in international equities trading. At the centre of this market are over 50 securities houses offering buying and selling prices for more than 8,000 domestic and overseas securities with prices displayed on thousands of information screens around the world.

The Exchange's position in cross-border equities is equally impressive, ground 60 per cent of the world's equity trading outside home markets passes through London, and this figure rises to more than 90 per cent within Europe. In the year to the end of March \1994, foreign equity turnover reached an impressive $671 billion, while total domestic equity market turn­over was $612 billion.

The Exchange has its administrative centre in London with regional of­fices in Belfast, Birmingham, Glasgow, Leeds and Manchester and the Irish Stock Exchange in Dublin. It is one of the largest in the world in terms of the number and variety of securities listed.

Around 10 million people in Britain now own shares directly and a great many others hold them indirectly through collective investment schemes such as pension funds and insurance investment.

In July 1994, the Exchange introduced the 10-day rolling settlement which meant that 250 years of an account-based system of settlement came to an end. The new system is designed to smooth workflows and reduce risk. Ten-day rolling settlement is the first phase of a programme of improve­ments to UK equity settlement, leading to the introduction of the Bank of England's CREST service. A move to 5-day rolling settlement is planned when the industry has adjusted to the new environment.

BIG BANG

Various pressures for change led to Big Bang. The London Stock Exchange of the late 1970s depended enormously on institution funds but once ex­change controls were lifted in 1979 many fund managers were attracted to foreign securities, principally through Tokyo and New York exchanges. Member firms on the London Stock Exchange were undercapitalized to trade in sufficient volumes to compete on international markets. At the same time, the London Stock Exchange came under enormous pressure when it was taken to court by the Office of Fair Trading (OFT) under the Restrictive Trade Practices Act. The OFT had three principal complaints: the operation of a scale of minimum commissions paid to brokers; the separation of capac­ity between jobbers and brokers; and restrictions on membership amounting to "closed shop" practices.

The pressure was relieved in 1983 when the then Chairman of the Stock Exchange, Sir Nicholas Goodison, reached an out-of-court agreement with the Secretary of State for Trade and Industry. The concessions offered by the Stock Exchange were the catalyst for major changes in the operation of the Stock Market — Big Bang in October 1986.

In the post Big Bang years, all three areas of OFT complaint have been resolved with the result that the scope and capability of the new Exchange has vastly increased. Banks and merchant banks swiftly bought up or merged with the stockbroking firms and took over many jobbers on the market. Dur­ing this period, a number of major privatisations (reversing the nationalisa­tion programme started in the 1950s) continued to open the stocks and shares market directly to millions of smaller private investors. <

Under the Financial Services Act 1986, members of the London Stock Exchange are now covered by a single SRO, the Securities and Futures Authority (SFA) and a single Recognized Investment Exchange (RIE), the London Stock Exchange. The Exchange as an RIE regulates the operation of the marketplace whilst the SFA sets the rules for securities houses' dealings with clients and monitors their conduct accordingly.

ПОЯСНЕНИЯ К ТЕКСТУ

Belfast — Белфаст Birmingham — Бирмингем Dublin — Дублин

Glasgow — Глазго

Leeds — Лидс

Manchester — Манчестер

Big Bang — «Большой шок», потрясение (резкое изменение в финансовой практике, экономической политике)

20. TODAY'S EXCHANGE MARKETS

The post Big Bang market is conducted almost entirely by electronic screen through the Stock Exchange Automated Quotations (SEAQ) system. Market makers are obliged to enter their competitive buying and selling prices during trading between 08.30 and 16.30 every day on SEAQ terminals in their of­fices. SEAQ puts together composite pages of these prices which are dis­played in broker dealers' offices through commercial quote vendor networks. Trading usually takes place by telephone although the Exchange operates an electronic execution facility for small bargains (SAEF). The Exchange operates in three principal markets: Domestic equity market

Ordinary shares issued by UK companies quoted on SEAQ are traded on this market which is based on the competing market maker system. Gilt-edged market

The Government meets its Public Sector Borrowing Requirement pre­dominantly by issues of gilt-edged stocks, or "gilts". These are issued through the Bank of England and traded in a secondary market through the Exchange with around $6 billion changing hands every day. Prices are dis­played by computer on a service independent of SEAQ but still administered by the Exchange.

International equity market

The SEAQ international system makes it possible for leading securities firms around the world to trade through the Exchange. Today there are over 50 market makers offering firm prices in over 600 overseas stocks.