§ Mr. TimmsTo ask the Chancellor of the Exchequer if he will make a statement about the proposed trade publication régime for the London stock exchange's new electronic trading system. [10552]
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§ Mrs. LiddellI have now received advice from the Securities and Investments Board on the London stock exchange's proposed trade publication arrangements for its new stock exchange electronic trading service.
I endorse the advice from the SIB that the exchange's proposed trade publication rules for SETS should enhance the price formation process, improve the quality of transparency and so make for a fairer market. The Treasury has also received advice on this matter from the Director General of Fair Trading. This concludes that, although there is a potential competition issue here, none of the proposed rules—which will be kept under review by the DGFT—is significantly anti-competitive at present.
I welcome the stock exchange's plans to move to a more transparent trading system on the introduction of its electronic order book. In my view, the proposed new rules strike a sensible balance between the need to maximise the transparency of the UK equity market, so that investors can be confident that they are trading on an equal basis with other market participants; and the need to maintain arrangements which enable risk principle trading to continue for those investors wishing to obtain competitive prices for large trades. The result should be to enhance the liquidity of the UK equity market and make it even more attractive to international investors.
The Treasury is today submitting a memorandum to the Treasury Committee in response to the Committee's recent reports on the London stock exchange. Apart from trade publication, one of the other issues raised by the Committee was the exchange's corporate governance arrangements. The exchange's planned move to a new trading system this autumn demonstrates that it is capable of taking and implementing strategic decisions about its market in the light of commercial and competitive factors. However, I agree with the Committee that the effectiveness of the exchange's corporate governance arrangements is an important issue and one which will need to be kept under review. In this context, the Treasury fully supports the governance principles espoused by the SIB—that a recognised investment exchange should avoid any conflict between its regulatory role and the pursuit of its commercial interests, and that an exchange should be run in the interests of the full range of its users and members.