Meanwhile, everyone else is being ripped off.In essence, the Stock Exchange has become a hostage to three or four powerful market-makers. It is their interests, rather than those of the investment community as a whole, which the exchange now serves The situation is a disgrace and demands government action. The Office of Fair Trading is already investigating the City’s underwriting cartel, but the sums involved here are an irrelevance set alongside the huge amounts being traded through the market each day Come on Mr Bridgeman. The order book is for many becoming little more than a sounding board for market makers and others to find out who’s buying and selling. The main business is then done away from the book.So what’s all the fuss about? If institutions don’t like the new system, there’s always the old one to fall back on, isn’t there? Unfortunately the old system, which obliged market-makers to deal at published prices, is no longer being enforced, officially because the exchange wants to encourage use of SETS. Since the order book is not allowing institutions to deal in the quantities they require, they are forced to fall back on the old quote-driven system, or to deal off-market entirely.

But according to Mr Augur’s letter, that is not the case for institutional investors, who on his calculations have seen the spread roughly double in size since the new system came into being.Partly as a result of this, the order book has failed to gain the level of trade and liquidity required to make it attractive to those dealing in larger blocks of shares. Since it was pressure from them, and the threat that they would move their business to the order-driven systems of the Continental bourses, which caused the exchange to introduce the new system in the first place, this is something of a turn up for the books.The Stock Exchange claims that retail trades are typically being done under the new system on a spread (the difference between the offer and bid price) which is 15 per cent better than the old, quote-driven way of trading. She had wanted to prevent electricity companies from selling gas to customers until their own markets were open to competition.Announcing the changes yesterday, Mr Battle was effusive in his thanks to Professor Littlechild, recording his “strong appreciation” of his contribution and the “key role” he played in improving service and lowering prices.His comments about Ms Spottiswoode were more perfunctory.Jeremy Warner, this page. Ironically, the problems are occurring with big institutional investors.

Technically it works just fine, and despite early concern that it badly disadvantaged small retail investors, it is now bedding down in a way which is probably mildly beneficial to them. But the coup de grace came from Philip Augur, group managing director of Schroders Securities. “The Stock Exchange should consider very carefully whether the 30 per cent market share for SETS (the new order-driven system) and the apparent worsening of spreads for institutional investors is consistent with its duties and will be sufficient to prevent an Office of Fair Trading inquiry”, he said in one of the most damning letters about the exchange I have ever seen aired publicly in the City.
How is it that the exchange, whose purpose it is to provide a public service system for the trading of securities, has come to attract such criticism, some of the fiercest since it was forced to abandon fixed commissions and dual capacity in the mid 1980s?Actually, there is nothing wrong with the new system as such. First came a survey of leading fund managers which found many to be damning in their criticism of the exchange’s new “order-driven” trading system. Then Tradepoint, a competitor to the exchange, said its research showed considerable dissatisfaction among institutional investors with the new set-up. IT HAS not been a good week for Gavin Casey, chief executive of the London Stock Exchange.

The shareholders were persuaded to buy Carl Fisher.Mr Austen said the group would stick with its strategy of expanding by acquisition.. But we’re really pleased.”The $55m (pounds 33m) rescue was arranged by setting up a new company, Boosey & Hawkes Group, and placing 6.5 million new shares with the company’s other shareholders. It’s been a difficult 12 months and it hasn’t been good for the business. Inevitably there is some management distraction when this is hanging over your head.

In the last year, speculation has run high that the company would be bought by a US firm – or by EMI.Peter Austen, finance director, said: “We are delighted we have achieved this. Musicians had feared for the group since Carl Fisher, a US publisher, put itself up for sale 12 months ago.
A sale would have included the stake in Boosey & Hawkes, threatening the company’s independence. BOOSEY & Hawkes, the British music publisher and instrument maker, yesterday removed a threat to its independence by buying Carl Fisher, its 38.4 per cent shareholder. The Government has left open the possibility of replacing the post of individual regulator with a board or commission, in which case the job will be to chair the new body.Ms Spottiswoode’s departure became inevitable after she was overruled by the Energy Minister John Battle in a dispute over the marketing of gas and electricity. Colleagues say that he may move into consultancy, perhaps for one of the big integrated US power utilities.The person appointed will initially take over as head of Ofgas and then move into the job of combined regulator.