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London Stock Exchange reduces its fees

PN 153/03    27 November  2003  

The London Stock Exchange (LSE) has agreed to reduce its UK main market annual issuer fees following an investigation by the OFT.

The OFT's investigation, under the Financial Services and Markets Act 2000, was in response to the LSE's significant increase in issuer fees for the year 2002/3.

Download new tariff for UK main market (pdf 50 kb).

The LSE has agreed to reduce its annual fees for issuers by more than 25 per cent on average with effect from 1 April 2004. The OFT estimates that these price reductions will reverse most of the 2002/03 increase – bringing it down from an increase of around 85 per cent to an increase of 35 per cent. The LSE has also agreed not to raise main market annual fees significantly for a further two years.

The LSE has also undertaken to reduce its admission and annual fees on AIM (the LSE's market for smaller companies). In all, it is estimated that had these prices been in place in 2002/03 the LSE's revenue from charges would have been around £5.8m lower.

In view of the LSE's agreement to reduce its fees, the OFT will conclude its investigation with a finding that the LSE's increase in fees does not have a significantly adverse effect on competition.  The OFT will publish a full report on its investigation and conclusions in due course. 

NOTES

1. 'Issuer fees' are fees charged to companies for their issued equity to be traded on the LSE's exchange. There are two main types of fees: 'admission fees' are those paid when a company's equity is first admitted for trading on the exchange, or when additional equity is issued; 'annual fees' are paid by companies for their issued equity to continue to be traded on the exchange. Issuer fees are paid by companies whose equity is traded on the LSE's main market (which covers, for example, the FTSE 100 companies) and on AIM.

2. The OFT investigated the LSE under the competition scrutiny provisions of the Financial Services and Markets Act 2000 (FSMA). As the LSE is a Recognised Investment Exchange (RIE), and therefore a 'recognised body' under FSMA, the prohibitions in the Competition Act 1998 do not apply to its regulatory provisions and practices. Instead, these are scrutinised for their effects on competition under FSMA.

If the OFT had identified a significantly adverse effect on competition it would have been required to publish a report, and a further investigation of the LSE's increase in issuer fees would have been carried out by the Competition Commission. Under section 304(3) FSMA, the OFT has a discretion to produce a report where no significantly adverse effect on competition is identified, and it intends to produce and publish such a report in this case. A copy of the report will be sent to the Competition Commission to the Treasury and to the Financial Services Authority, but the OFT will not ask the Competition Commission to investigate the fee increase.  The OFT will continue to keep the LSE's fee structures under review as it is required to do by section 304(1) FSMA. 

3. Download new fees that will apply from 1 April 2004 (pdf 50 kb).

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