ISBN 1-85765-517-6

Table of Contents

Executive Summary

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TABLE OF CONTENTS

Executive Summary

Market Definition

INTRODUCTION

THE UK STOCK MARKET

'BIG BANG' CHANGES

THE ELECTRONIC MARKET

REGULATION

MEMBER FIRMS OF THE LONDON STOCK EXCHANGE

MARKET SECTORS

THE STOCKBROKER'S PORTFOLIO

PRIVATE CLIENT STOCKBROKING SERVICES

WHAT THE STOCKBROKER CHARGES

THE TRADING MARKETS

THE UK EQUITY MARKET

THE INTERNATIONAL EQUITY MARKET

THE GILT-EDGED AND FIXED INTEREST MARKETS

THE MARKET FOR SMALLER COMPANIES

SETTLEMENT SERVICES

THE SEQUENCE PROGRAMME

MARKET TRENDS

Table 1: Member Firms of the London Stock Exchange, 1986-1994

Table 2: London Stock Exchange - Annual Turnover in UK and Irish Equities, 1990-1994

Table 3: London Stock Exchange - Annual Turnover in Foreign Equities, 1990-1994

Table 4: Breakdown of Total Turnover of Foreign Equities on the London Stock Exchange by Country ( percent), 1994

Table 5: London Stock Exchange - Turnover in Gilts (£m), 1990-1994

Market Size

INTRODUCTION

TOTAL MARKET TURNOVER

COMMISSION

TRANSACTIONS

COMMISSION INCOME

'SOFT' COMMISSION

OTHER INCOME

GILTS

TOTAL MARKET EARNINGS

MONEY RAISED

MARKET PERFORMANCE

ALTERNATIVE MARKETS

Table 6: Market Turnover of the London Stock Exchange by Total Value (£bn), 1990-1995

Table 7: Average Dealing Fees and Charges from Private Client Stockbrokers (£), June 1995

Table 8: Portfolio Management Fees and Charges from Private Client Stockbrokers (£), June 1995

Table 9: UK Equities - Transaction Profile ( percent), 1993 and 1994

Table 10: Commission-Paid Business of the London Stock Exchange ( percent), 1994

Table 11: Estimated Total Commissions Paid of the London Stock Exchange (£bn), 1994

Table 12: Stockbroker Services - Analysis of Revenue ( percent), 1993

Table 13: London Stock Exchange Shorts and Other Gilts - Transaction Profile ( percent), 1994

Table 14: Estimated Total Earnings of UK Stockbroking Firms (£bn), 1994

Industry Background

RECENT HISTORY

INDUSTRY CONCENTRATION

DISTRIBUTION

REGULATION

TRADE ASSOCIATIONS

Table 15: Turnover in Stocks Traded Under Rule 4.2 (£m), July 1994-June 1995

Table 16: UK Share Ownership by Type of Investor ( percent), 1995

Table 17: Fund Managers' Share of UK Equity Market Holdings by Value ( percent), 1989 and 1994

Table 18: Top Ten UK Managers of External Funds (excluding life assurance companies) by Total Funds Under Management, 1990-1993

Table 19: Growth of Segregated Funds by Annualised Total Return ( percent), 5 years to 31st December 1994

Table 20: Brokers of New Issues by Number of Companies, Market Value and Money Raised, 1994

Table 21: Member Firms of London Stock Exchange by Activity, 1993 and 1994

Competitor Analysis

INTRODUCTION

FOREIGN TAKEOVERS

THE PRIMARY MARKET

METHOD OF LISTING

THE MAJOR BROKERS

ADVERTISING AND PROMOTION

Table 22: Companies on the Official List and Money Raised on the London Stock Exchange, 1990-1994

Table 23: Financial Profile of BZW (£m), 1992-1994

Table 24: Financial Profile of Schroders PLC (£m), 1992-1994

Table 25: Financial Profile of King & Shaxon PLC (£000), 1994 and 1995

Table 26: Profile of NatWest Stockbrokers Ltd (£000), 1993 and 1994

Table 27: Average Allocation of Commissions to Brokers by UK Institutions ( percent), 1993 and 1994

Table 28: Profile of Mercury Asset Management Group PLC (£bn and £m), 1991-1995

Table 29: Main Media Advertising Expenditure of Stockbroker-Related Products and Services (£000), 12 Months to June 1995

Strengths, Weaknesses, Opportunities and Threats (SWOT)

INTRODUCTION

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

Buying Behaviour

UK SHARE OWNERSHIP

LONDON STOCK EXCHANGE - CLIENT PROFILES

EUROPEAN SHARE OWNERSHIP

Table 30: UK Share Ownership, 1979-1993

Table 31: percentage of UK Quoted Equities Owned by Sector ( percent), 1975-1994

Table 32: Penetration of Adults Owning Stocks and Shares in Great Britain ( percent), 12 Months to March 1995

Table 33: Sourcing Trends of Adults Owning Stocks and Shares in Great Britain ( percent), 12 Months to March 1995

Table 34: UK Share Ownership by Social Class, Age and Sex ( percent of adults holding), 1993

Table 35: London Stock Exchange UK Equities - Client and Bargain Profiles, 1993 and 1994

Table 36: London Stock Exchange Foreign Equities - Client and Bargain Profiles, 1993 and 1994

Table 37: London Stock Exchange Gilts - Client and Bargain Profiles, 1994

Table 38: European Share Ownership by Investor Type ( percent), 1995

Outside Suppliers to the Industry

INTRODUCTION

SEQUENCE

STOCKBROKER LINKS

CREST

TRADEPOINT

Current Issues

MERCHANT BANKS

EUROPEAN SECURITIES

THE LONDON STOCK EXCHANGE

ALTERNATIVE FOR UNIT TRUSTS

INFOTRADE

INTERACTIVE INVESTOR

ELECTRONIC SHARE INFORMATION (ESI)

ORDER DRIVEN TRADING

DISMISSAL OF STOCK EXCHANGE CHIEF EXECUTIVE

Forecasts

FACTORS INFLUENCING MARKET

FORECASTS 1995-1999

Table 39: London Stock Exchange Trading Volumes Versus Key Economic Indicators (£bn and percent), 1990-1994

Table 40: Forecast Market Turnover - Total Business of All UK Exchanges (£bn), 1995-1999

Company Profiles

INTRODUCTION

DEFINITIONS

FURTHER INFORMATION

Further Sources

ASSOCIATIONS

PERIODICALS

DIRECTORIES

GENERAL SOURCES

HBI UK INFORMATION SOURCES

GOVERNMENT PUBLICATIONS

OTHER SOURCES

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EXECUTIVE SUMMARY

Stockbroking in the UK is facing a period of significant change, as developments in technology bring new exchanges and new dealing practices into the market. The value of market turnover on the London Stock Exchange for 1995 is estimated to have broken through the £3,000bn barrier for the first time, reaching an estimated £3,113bn by the end of the year; 5.5 percent up on 1994 and in real terms more than 65 percent higher than 1990.

The UK securities market is dominated by institutions which own more than 62 percent of the shares on issue, compared with less than 18 percent held by private investors. However, industry watchers believe that cash from the big institutions is dwindling and as stockbrokers aim more marketing activity towards private investors they face increasing competition from new `execution-only' share services, private banks and a growing number of solicitors and accountants.

Institutional stockbroking has not escaped the spate of takeovers and mergers, which has left the City with only two independent private banks remaining and many leading brokers now part of very large overseas financial institutions.

Whilst some 21 percent of the UK's adult population own shares, more than half acquired them over 5 years ago, largely as a result of Government privatisations and only one in four made further investments during 1995. Nearly 20 percent have an option to buy shares in the place where they work, but only 8 percent do so.

Market makers' spreads, brokers' commission levels and the costs of new electronic trading systems are all under intense scrutiny, as the London stock market faces challenges from new exchanges and share dealing services over the Internet. In 1996, further difficulties are likely to arise, as the European Union's Investment Services Directive comes into effect, allowing stockbrokers to become remote members of other EU exchanges.

The approach to the next millennium could be a difficult time for the London stock market, as it strives to adjust to the many changes taking place in a period which includes a general election, the outcome of which is uncertain, and the possibility of a change in Government. Key Note is forecasting only moderate growth, with market turnover increasing at an average of 4 percent per annum to reach £3,657bn by the end of 1999. Trading in UK equities and bonds is likely to outperform gilts, which could suffer as a result of the fluctuating forecasts from Government for the performance of spending and growth in the UK economy.

Text © 1996 Key Note

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