UK RECOGNISES NASDAQ LIFFE, LLC FUTURES EXCHANGE

Ruth Kelly, Economic Secretary to the Treasury, today announced UK Government recognition of Nasdaq LIFFE, LLC Futures Exchange, which meets the criteria laid down in the Financial Services Act 1986.

Welcoming the decision Ruth Kelly said:

?I am pleased that Nasdaq LIFFE, LLC Futures Exchange has satisfied the criteria in the Financial Services Act and look forward to it opening for business in the UK. Today's decision is further recognition of London's status as a leading international financial centre.

?UK investors can now directly trade on the US Exchange using screens based in London. The advantages include wider choice and greater convenience, and demonstrates that London is both a competitive and efficient place in which to do investment business.?

NOTES FOR EDITORS

1. Recognition as an overseas investment exchange under sections 37 and 40 of the Financial Services Act 1986 enables the exchange to carry out investment business in the UK.

2. Recognition Nasdaq LIFFE, LLC Futures Exchange as an additional overseas investment exchange will promote greater efficiency and innovation to the benefit of all, including consumers and the UK financial services industry. Recognition should provide UK investors with greater choice and lower transactions costs, and should provide the marketplace with greater liquidity and depth.

3. Other currently UK-recognised overseas investment exchanges are:

NASDAQ

Sydney Futures Exchange
Chicago Mercantile Exchange
Chicago Board of Trade
New York Mercantile Exchange
Swiss Exchange
Cantor Financial Futures Exchange
Eurex Zurich
Warenterminborse Hannover (Hannover Commodity Exchange) and
New Zealand Futures and Options Exchange Ltd (NZFOE)

4. Criteria for the recognition of overseas exchanges outside the EU are laid down in sections 40 and 119 of the Financial Services Act 1986. The main criteria are:

that the exchange is subject to supervision in its home country, which, together with its own rules and practices, affords UK investors protection at least as good as that provided by UK regulatory arrangements relating to UK exchanges;
the exchange is able and willing to cooperate by sharing information and otherwise with the UK authorities, and adequate arrangements for such cooperation exist between the relevant national authorities;
that none of the rules, guidance and clearing arrangements have significantly anti-competitive effects, or if they do, that these effects are no greater than is necessary to protect investors. The Office of Fair Trading advises HM Treasury on this point.

5. Nasdaq LIFFE, LLC Futures Exchange applied for recognition on 12 June 2001. The Treasury has been in external discussions concerning their application since then. The report from the Office of Fair Trading was received on 14 August 2001.

6. Overseas exchanges are regulated primarily by their home state regulatory authorities. Nasdaq LIFFE, LLC Futures Exchange will be regulated by the Commodity Futures trading Commission (CFTC) and The Securities and Exchange Commission (SEC). Regulatory authorities have confirmed that they are willing and able to exchange regulatory information.

7. UK investors are protected by scrutiny against a range of criteria under the Financial Services Act. To be recognised, exchanges must, amongst others:

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 clearing arrangements which guarantee transactions in the event of default
have adequate arrangements and resources to ensure compliance with its rules.

8. EU investment exchanges (except commodity exchanges) do not need formal recognition to carry out investment business in the UK under the terms of the EU Investment Services Directive.