LSE rakes in profit as it plays numbers game

EVERY time the

The Exchange was at it again yesterday. In its pre-close update it reported that the average number of equity bargains per day rose from 213,000 to 230,000, primarily reflecting continued growth in volumes on SETs. Total SETs trading was 26% higher at 134,000 on average per day.

SETs replaced the quote-driven trading system - which had been successful for more than 200 years - under which market makers offered prices at which they would buy and sell, and trades were executed over the phone.

Under SETs the process is automated via an electronic order book that matches buy and sell orders and carries out the trade. The overall aim was to improve the efficiency and liquidity of the stock market. Investors were promised narrower spreads and lower costs.

The truth is that it is a system that still only suits the big institutional players, but remains the bane of every small and medium-sized stockbroker in the City.

'It's time consuming, expensive and an overall pain in the neck,' said one broker. 'I had 93,000 HBOS shares to sell on SETs this week and it took me 28 fills to complete the bargain.'

Another dealer said it took one trader an incredible 42 fills to complete a sell order of 100,000 Barclays Bank. How can that be an efficient system?

Meanwhile, the LSE hierarchy rubs its hands together because it rakes in £1.40p a hit. No wonder profits are on the up. Shares of the Exchange held at 355p with Numis a fan. It says it will benefit from improving conditions and has a target price of 420p.

Good results from fashion retailer Next (40p better at 1400p) and hedge fund giant Man Group (62p up at 1717p) got proceedings off to a firmer start.

Wall Street's early 97-point jump on better-than-expected US weekly jobless claims gave sentiment in London a late boost, leaving the Footsie 64.2 points higher at 4373.6.

Sterling dropped to $1.8101, while the euro improved to 67.2p and $1.2174.

Reports of a pending bullish circular lifted Cable & Wireless 8 1/2p to 130 3/4p. Revived gossip that Hutchison Whampoa is about to launch a 125p-per-share cash offer helped mobile phone group mmO2 buzz 5p higher to 101 3/4p. Vodafone improved 5p to 130p after buying back a further 50.8m shares at an average price of 126p per share. Colt Telecom advanced 4 3/4p to 97 3/4p after Investec upgraded to buy from hold.

Footsie newcomer and copper miner Antofagasta jumped 45p to 1030p following chairman Andronico Luksic's purchase of 26,000 more shares at 999p. He now holds more than 65%.

Former British Steel group Corus firmed 3p to 40 1/2p after announcing a price rise of a minimum £50 a tonne in the UK from July, while other countries in the EU face rises of up to 20%.

Buying ahead of next week's results lifted office rental group Regus 3p to 78p.

Ramco Energy crashed 57p to an alltime low of 38p following more disastrous news from its Seven Heads gas fields in Ireland. Deutsche Bank downgraded to sell after the company said data suggests that its Seven Heads reserves will be lower than expected.

MTL Instruments soared 17 1/2p to 212 1/2p on excellent results showing pretax profits for the year to end-December up from £1.7m to £3.6m.

Two new issues performed well on their Aim debuts. Australian miner Albidon moved up from its placing price of 21p to close at 24 1/2p, a premium of 3 1/2p. Goldstone Resources, a mineral explorer in Guyana, left its placing price of 25p way behind and touched 32p before closing at 28 1/2p.

Premiership football club Aston Villa, of which veteran property entrepreneur Jack Petchey owns 14%, jumped 17 1/2p to 250p after rejecting a takeover approach from a consortium including former Manchester City fullback Ray Ranson.