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London stock exchange - Now for the details...

The news of an alliance between the sleepy London Stock Exchange and the Deutsche Börse, its biggest European rival, surprised the market. Eventually the partners hope to bring in other bourses. That pleased the Dutch but the French felt slighted - they'd been courting the Germans too. The devil will be in the detail: the Germans let slip that they thought their settlement system would win out, much to the chagrin of London's CrestCo and the LSE's derivatives counterpart Liffe. So will it be London-on-the-Main or Frankfurt an der Themse? Antony Currie reports.

Sets on the brain


An emasculated former gentlemen's club, uncommunicative, uncooperative, dictatorial, slow to act and react, with a talent for wasting money and shooting itself in the foot: that's the common market view of the London Stock Exchange. The exchange rarely attracts positive comments even though its market capitalization, £1.25 trillion, it is more than twice the size of Deutsche Börse. It does, however, have some advantages over these bourses: English is finance's lingua franca, the City of London is Europe's major financial centre, and the LSE has a longer history of equities listing and trading. But these are hardly the result of recent hard work by the exchange's officials and members.

Nor, until last month's sudden announcement of a joint venture with the Deutsche Börse, did many observers expect that anything would change soon. As with derivatives counterpart Liffe, the LSE appeared to be fighting a rear-guard battle to maintain its historical role as the leader in its field in Europe. And, as with Liffe, it was losing out to seemingly more dynamic, successful continental European exchanges. These were also the exchanges that were making the most noise about cooperating in preparation for European monetary union.


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