Investment Banks Sign Letter of Intent to Pool Trading Information

Members of a consortium of leading investment banks have
signed a Letter of Intent and Term Sheet to pool trade transparency
information across Europe to create a trade data and market data
dissemination platform. The members of the consortium are: ABN AMRO,
Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, Merrill
Lynch, Morgan Stanley and UBS.
This platform is expected to yield significant cost benefits with
respect to both trade reporting and market data dissemination. This
move is a response to the opportunities created by the European
Union's Markets in Financial Instruments Directive (MiFID) which is
expected to come into force on November 1, 2007 to create a more
transparent and competitive landscape in financial markets.
In a number of key markets in Europe, including the U.K., market
participants are currently required to report trades conducted
over-the-counter (OTC) to exchanges who charge a fee to receive this
information and then generate market data revenues from collating and
selling this information. In other markets, such as Germany, there is
no requirement to report OTC trades and thus knowledge of these trades
is not made available to the market. As a response, the consortium has
taken the initiative to create a single pre- and post-trade reporting
and market data platform on a pan-European basis. This platform is
therefore expected to improve transparency and yield significant cost
benefits as a result of the economies of scale it will generate and
also allow the participants to comply fully with the relevant
requirements of MiFID.
To improve post-trade transparency, MiFID introduces consistent
OTC reporting rules across EU markets such that all OTC trades must be
reported. MiFID also allows non-exchange entities to receive, process
and disseminate trade reporting information, creating healthy
competition with exchanges in trade reporting and market data.
Furthermore, for certain levels of trades, there is a requirement for
firms routinely trading OTC in so-called "liquid shares" to publish
the prices at which they are prepared to deal.
While MiFID is a catalyst, the banks have been considering for
some time how to improve the cost effectiveness of trade data capture
and dissemination. This initiative will create an optimum platform
that has the ability to scale and evolve to meet the needs of the
industry and encourage further competition. Further benefits will
arise as other users are attracted to contribute data on the same
terms as the consortium banks. Although the initial focus is on the
European equity market, the platform will be developed both to meet
potential new regulatory requirements and future market demand. This
includes opportunities for expanding across the product range.
Consortium members will have equal shares in the platform and,
given its importance to their businesses and to the wider industry,
they intend to retain control of the planned entity for the
foreseeable future.
While the project is being championed by the consortium, any
qualified market participant will be encouraged to use the system to
help them achieve MiFID compliance in this area. Each class of users
(e.g. contributing brokers, market data vendors, fund managers, etc.)
will be treated the same as others in their class with no priority
being afforded to the consortium members. Non-consortium financial
institutions will be encouraged to pre-trade quote, post-trade report
and contribute their market data to the platform, the value of which
will be recognized within the proposed contractual terms.
The consortium welcomes those MiFID changes that will bring more
consistency and competition across Europe. These include the removal
of "hard" and "soft" "concentration" rules, which in a number of
countries force trades and trade reports onto exchanges, and the
requirement for transparency for all off-book trades. Additionally,
the consortium believes that this initiative will play an important
role in making pan-European over-the-counter equity market data
available on a fair and timely basis.
The consortium is in the process of finalising the appointment of
a service provider to supply a new user-led platform. In its first
phase, the platform will capture, aggregate, distribute and display
pre-trade quotes and post-trade reports for over-the-counter European
equity deals. Such functionality will enable compliance with MiFID's
transparency requirements. A Request for Proposal was sent to leading
service providers in July 2006 and a decision is expected to be
announced on the chosen provider in October 2006.
The consortium intends to complete development and implementation
of the first phase of functionality, equity pre-trade quotes and
post-trade reporting, ready for parallel operation by participating
firms by August 1, 2007.

PRESS CONFERENCE

There will be a press conference call at 12:00 today UK time,
13:00 CET, Tuesday, September 19, 2006. Dial in details for the press
conference are set out below, depending from which country the caller
is connecting. Press queries ahead of the call, or subsequently, can
be sent to Duncan Paterson on dxpaterson@btinternet.com, who will
represent the consortium's views to the media.

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Dial-in Details

Location Phone Number

UK Dial In: +44 (0)20 7162 0025

Paris: +33 (0)1 7099 3208

Frankfurt: +49 (0)695 8999 0507

Amsterdam: +31 (0)20 7965 008

Brussels: +32 (0)2 290 14 07

Madrid: +34 917 889 507

Milan: +39 023 0350 9003

Stockholm: +46 (0)8 5052 0110

Copenhagen: +45 3271 4607

Geneva: +41 (0)2 2592 7007

Dublin: +353 (0)1 4364 106

Vienna: +43 (0)268 2205 6292

Helsinki: +358 (0)9 2313 9201

Lisbon: +351 211 201 731

Budapest: +36 (0)618 8932 15

Luxembourg: +352 270 0073 408

Oslo: +47 2156 3120

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