The London Stock Exchange plans to withdraw from the Federation of European Exchanges (FESE), dealing a blow to the trade association for the region’s established bourses as its steps up its lobbying efforts on issues such as “dark pools”.
John Wallace, LSE spokesman, told FT Trading Room: “We are reviewing a number of our memberships across the organisation. We have decided to leave FESE and will seek to work more directly with regulators, legislators and the markets we serve across Europe.”
Mr Rolet sent a letter to FESE secretary general Judith Hardt with the LSE’s decision on Tuesday. Ms Hardt said: “It came as a surprise. There was no reason given and we would of course want to talk before taking any steps. We will definitely try and see what we can do to keep them on board.”
The LSE declined to say why it had decided to leave the organisation, which was founded in 1974 and has over 43 members, including Deutsche Börse, Euronext and the London Metal Exchange.
But the move is a sign that a recent criticism by some of the world’s largest exchanges of the large banks’ off-exchange activities is not shared by some exchanges, which see their interests increasingly aligned with those same banks.
It is also a sign that medium-sized exchanges like the LSE can not afford to antagonise their biggest customers – the banks – at a time when they need their co-operation on key new initiatives, such as clearing.
Xavier Rolet, a former Lehman Brothers and Goldman Sachs trading expert, has spent time since he took over in May repairing damaged relations with the LSE’s 15 biggest customers, mostly banks.
He has redesigned the LSE’s dark pool, Baikal, as a joint venture with the banks. Under his predecessor, Dame Clara Furse, the project was designed as a way of accessing directly the asset and investment manager clients of the banks, bypassing the banks.
Last week, FESE launched an attack on the proliferation in Europe of dark pools run by banks. FESE did not name any banks but such facilities are operated by most big banks, including Goldman Sachs, Credit Suisse and JPMorgan.
It said such venues, also known as “crossing networks” are not properly registered under rules laid out by the Markets in Financial Instruments Directive (Mifid). Mifid launched competition in European share trading in 2007, leading to an explosion of new type of trading venues.
In a letter to Eddy Wymeersch, chairman of the Committee of European Securities Regulators, Ms Hardt said FESE believed the banks’ dark pools were “unregulated venues” operating with “full opacity”. The European equities market was “becoming a dealer market”.
The LSE is engaged in a cost-cutting drive. Annual membership of FESE costs €180,000. The UK exchange remains a member of the World Federation of Exchanges.
Source: FT, 30.09.2009
Filed under: Exchanges, News, Services, ATS Alternative Trading Systems, BAIKAL, Dark Pools, FESE Federation of European Securities Exchanges, Goldman Sachs, LSE Londo Stock Exchange, Regulation
[...] London Stock Exchange to leave FESE 30.09.2009 [...]