Alternative stock market operator Tradepoint, due to go live with a pan-European share trading service on Monday, 10th July, received a boost yesterday when the US Securities & Exchange Commission (SEC) issued a 'no action' letter effectively giving Tradepoint permission to offer European stocks to its US investor members.
The SEC granted a filing exemption to the Tradepoint Stock Exchange on 23 March 1999, the first time the SEC had allowed any foreign stock exchange to trade in the US. Based on that limited exemption, Tradepoint currently offers US brokers and investors access to about 2,000 listed UK stocks. At the time, Tradepoint said that it planned to have 100 US members (ie US brokerages or trading firms that would become its members), but in fact it has only four and trading is very limited.
The new exemption, which will obviously broaden out the range of stocks on offer, coupled with Monday's Europe-wide launch, may be what the ecn needs to break into the US market in a big way. Richard Kilsby, Tradepoint's chief executive, who has set the group the target of being the "principal market place for Eurotop 300 shares by 2001" said that there were several more US market participants in the process of becoming members and that the number should accelerate in the coming months.
Historically, US investors have not been significant holders of international equity, but it is true that there has recently been a very rapid increase in the international holdings of US funds in listed shares, which more than doubled in 1999 to over $1bn. From Monday, Tradepoint will be in a good position to service this growing demand - it will be cheaper and quicker for its US members to access European stocks through the ecn than via their US brokerages.
The Tradepoint Consortium is a group of 11 leading brokerage and financial services firms including Deutsche Bank, Merrill Lynch and Instinet.
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