Exchange signs deal with Euroclear

THE London Stock Exchange has taken a significant step in the push to compete with its European counterparts by striking a deal with Continental share settlement group Euroclear.

The move, which ends Crest's monopoly over the settlement of shares traded on the Exchange's Sets system, aims to bring the costs of trading London shares from outside Britain into line with those incurred by domestic traders.

It costs up to seven times more to settle trades conducted from outside Britain, putting the LSE at a significant disadvantage in the increasingly fierce battle with its Frankfurt and Paris competitors. This is partly because brokers need separate, costly computer links with each settlement agency. Trades conducted by Euroclear will be settled with the London Clearing House.

'We want to encourage transparent and fair competition and horizontal consolidation among service providers,' said LSE chief executive Clara Furse.

Share settlements were a key issue during last year's failed efforts to merge the LSE and Deutsche Börse.