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25 May 2000

COREDEAL RECOGNISED AS INVESTMENT EXCHANGE

Economic Secretary Melanie Johnson has given the Financial Services Authority (FSA) leave under the Financial Services Act 1986 to recognise COREDEAL LIMITED (COREDEAL) as an investment exchange.

Miss Johnson's decision was reached after receiving a report from the Director General of Fair Trading (DGFT) which concluded that the rules of COREDEAL do not appear likely to restrict, distort or prevent competition to any significant extent. Accordingly, she has concluded that there are no grounds on which the Treasury should refuse the FSA leave to recognise
COREDEAL as an investment exchange.

Miss Johnson said :

?I welcome the FSA decision to recognise COREDEAL as an investment exchange in the UK. COREDEAL's decision to set up an investment exchange here shows that the UK is a good place to do business and will continue to have an attractive regulatory environment. It is further confirmation of the UK's continuing position as the world's leading international financial centre.?

NOTES FOR EDITORS

  1. Recognition as an investment exchange under section 37 of the FSA 1986 (the Act) enables the exchange to carry out investment business in the UK. The Financial Services Authority applied to the Treasury for leave to recognise COREDEAL under Section 120 of the Act.
  2. Under the Act, the Financial Services Authority is responsible for recognising domestic investment exchanges and assesses the exchange applicant's investor protection arrangements.
  3. Under the Act, applications for recognition as a domestic exchange requires the Treasury to consider their consistency with EU law and a report by the DGFT on whether the rules of the exchange have, or are intended or likely to have, any significant anti-competitive effects.
  4. COREDEAL is an electronic exchange for international debt-related securities and owned and operated by COREDEAL Ltd. COREDEAL Ltd is owned by the International Securities Market Association, based in Zurich and a group of thirteen multinational banks and securities houses.
  5. COREDEAL applied to the Financial Services Authority for recognition on 14 April 1999. The report from the Office of Fair Trading was received on 26 April 2000.
  6. Recognition of COREDEAL should provide UK investors with greater choice for trading in securities and increase competition within the UK financial services industry between other UK exchanges.
  7. The other domestic recognised investment exchanges are: London Stock Exchange
    International Petroleum Exchange London International Financial Futures Exchange
    London Metal Exchange OMLX London Securities and Derivatives Exchange Tradepoint
  8. Criteria for the recognition of investment exchanges are laid down in Schedule 4 of the Act.
  9. UK investors are protected by scrutiny against a range of criteria under the Act. To be recognised, exchanges must, amongst other requirements:
  • have financial resources sufficient for the proper performance of its functions
  • have rules and practices which ensure that business is conducted in an orderly manner
  • limit dealings to investments where there is an orderly market
  • have adequate arrangements and resources to ensure compliance with its rules.

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