The London Stock Exchange is reviewing the performance of its EuroSets Dutch Trading Service, which has fallen well short of expectations by capturing less than two per cent of the market since launching in May last year.
The LSE was expecting the service to capture 30% of trade in Dutch stocks by capitalising on disaffection among local brokers about the price and quality of service available via the Euronext trading platform. German rival Deutsche Börse also moved to expand the number of Dutch securities available for trading on its Xetra platform from eight to 25 and reduce clearing fees by 60%.
Euronext was forced to slash 30% off the cost of trading in Dutch stocks in a bid to head off the competition.
The UK exchange says it will now need to see increased levels of trading to meet its expectations for this service. Clara Furse, LSE chief executive, told reporters that the exchange put in a great deal of effort into getting the service off the ground, but it is up to the market to decide whether it wants to shift liquidity to the system.
The news comes as the exchange reports flat profits for the year ending 31 March 2005, after recording hefty costs (£6.8m) associated with its potential takeover by Euronext or Deutsche Borse.
Pretax profit for the year was £89.1m, up slightly from £88.8m last year. But full year net profit fell to £62.2m, from £63.4m in the previous year. Turnover rose four per cent to £259.7m.
LSE share were up 1.50 pence to 464.00 pence in mid-day trading.