Foolish Special

[ June 9, 2000 ]

The iX Alternative

By Winfried Rauter (TMFBerlin)

How could anyone doubt that the British are the real winners of the Frankfurt-London stock market merger? The island dwellers long ago realised the growing demand for new stock market blood and took the wise precaution of setting up training centres for future stock brokers all around the country. In partnership with firms such as Bass (LSE: BASS) and Slug and Lettuce (LSE: SLU), which offer their premises, as well as Scottish and Newcastle (LSE: SCTN) and Diageo (LSE: DGE), which take care of the liquidity side of things, a number of commercial colleges were opened. For these places of "Permanently Ubiquitous Brokerage" the visionary Brits found an appropriate acronym which does not infringe any copyrights: PUB. This is unlike the proposed name for the Frankfurt-London stock exchange, 'iX', which has long been the name for a German computer publication.

In spite of the fact that the exchange rate for the pound is currently exorbitant, all tourists visiting the United Kingdom should go to one of these "PUBs" if they wish to study the rituals and group dynamic processes connected to the stock market. This is because events on the market are emulated here in a way which anyone can comprehend. Trading occurs strictly within a fixed period, the opening and close of which are indicated by the ringing of a bell, just like at the exchange. When the session starts, the players commence by getting acquainted with the goods on offer -- the English moniker for these being "Pints" -- and spend their time in quiet accumulation of the same. Later on in the trading session, however, turbulent scenes frequently ensue.

This is when the background noise so typical of the trading floor develops. At this time the buyers like to band together in larger groups in order to discuss the market situation or to exchange tips and rumours. Late in the evening when traders on the other side of the Atlantic commence business, the pace of buying becomes frenetic. And shortly before trading time ends, this turns into a veritable buying panic, with everyone afraid of missing an opportunity.

Around now is when the dispassionate observer finds himself in an ideal position to understand the trading habits of the brokers, habits which stem from an increasing loss of control: any old brew now becomes a strong buy and all concerns fade away. Such rapacity often leads to a monster of a hangover the next day.

Those who still did not get enough up to the final bell meet with like-minded fellows for some agreeable after-hours trading in one of the many clubs where markets are still being made late into the night. They'd better watch out, however, for the government of Tony Blair is after their necks. Before long the pub licensing law will cease to be in force, an action that is in line with the general prolongation of European trading times.

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This article originally appeared in Die Zeit -- www.zeit.de