Lesson 11
The International Stock Exchange

I he Stock Exchange' has long served the needs of government , industry and investors in providing the central market place for the issue and trading of securities2.

Nearly every adult in the United Kingdom saves or invests money in some form or other3. The International Stock Exchange exists to provide a channel through which these savings can reach those who need finance. The International Stock Exchange is first and foremost a capital-raising market providing a regulated framework, based on statute, whereby long-term capital4 in the form of tradable securities can be raised by companies and governments. This primary capital raising3 is supported by the quality of the ISE's secondary capital market6 which offers investor.0, a place to trade
tliose securities.

The International Stock Exchange is the central market place for over 7 000 securities. This central market place covers not only government stocks (called gilts) and company securities (called equities and fixed interest stocks); it is also the market place for a number of other investment instruments.

One of the most impressive images of the Exchange is that of ihe market floor7, where brokers met to do business with the market makers8 (previously known as jobbers) in the various securities. This has now changed with the in troduction of new technology. The market floor is now a SEAQ (Stock Exchange Automated Quotations System) television screen located in the broker's office——anywhere in the United Kingdom or overseas, but connected to the Exchange's computers in London. The same market price information which used to be found9 only on the market floor is now used by brokers all over the world to conclude deals over the telephone and through computer systems on behalf of their clients.

While the market floor may no longer he used, the protections for investors who use International Stock Exchange member firms for their investment business remain as strong as ever. Member firms agree to uphold certain rules governing their relations with their clients and the other market users.

High standards of investor protection are provided by a well established complaints procedure, discipline and enforcement arrangements as well as a compensation fund. International Stock Exchange member firms undergo rigorous admission procedur;'s. and their employees who deal with the public (called Registered Representatives) are required to have certain qualifications, usually obtained by taking examinations set by the Exchange.

The interests of the membership10 of the International Stock

Exchange are reflected in its Governing Council, whose members set rules", administer and enforce standards, as well as govern the activities of the Exchange's staff. A number of standing committees oversee nearly 3 000 employees who run the services and computer systems through which International Stock Exchange member firms conduct their business. Other standing committees are devoted to setting and enforcing the market rules, as well as disciplining any members found to be in breach of those rules.

Under the new regulatory framework the International Stock Exchange has sought recognition as an RIE12 tor investment business in four markets:

1. the Domestic Equity Market which covers three areas:
1 ) The listed market"—— for well-established companies14 who must be a'uie to comply with stringent criteria relating to all aspects of '-heir operation.
2) The Unlisted Securities Market——a market created in 1980 to meet the needs of established, but smaller, less mature companies.
3) The Third Market--—-a new, disciplined market established in January 1987 and designed to enable young, growing UK companies to raise capita; on a cost-effective and straight forward basis.

2. The Gilt-Edged Market
A large proportion of the government spending is raised through income tax16, VAT'7, corporation tax and other taxes. However, a shortfall usually remains, which has to be met by borrowing, in order to balance the books18. One of the ways the government meets the Public Sector Borrowing Requirement is by selling gilt-edged stocks"". Gilts are bought and sold in huge quantities, mainly by institutional investors21.

3. The Traded Options22 Market
Options are contracts giving the right to buy and sell a security at an agreed price within a particular period of time. The Traded Options Market provides investors with the means to hedge"' or protect their positions in underlying securities by buying or selling an option. In addition to company securities, options are also available on gilts, currencies and indices.

4. The Foreign Equities Market
Foreign equities which refer to securities listed on overseas exchanges have become an increasingly important part of the business of securities firms whether or not these firms were members of the International Stock Exchange.

Each of the tour markets is run by a separate committee of Council members and other co-opted practitioners with expertise in that particular market area'4. By writing the specific rules governing the markets, these committees can act quickly to ensure the maintenance of an efficient service for member firms and investors.

Today, trading on the International Stock Exchange in London exceeds ￡5 billion a day; sophisticated electronic systems make trading fast and efficient, not just in shares of UK companies but in those of overseas companies as well; and London's Member Firms are now as international as the securities business in which they deal, competing effectively with the best in the world.

Words and Expressions
investor n. 投资者
securities n. 有价证券
channel n. 途径；门径
finance n. 资金支援；资金
statute n. 法令，法规，成文律
equities n. （股息不定的）普通股；股票
raise v. 筹资
indices n. （index的复数形式）指数
gilt n. 金边债券
abiding a. 持久不变的；永久的
broker n. 经纪人；中介人
jobber n. 股票买卖经纪人
uphold v. 维护；支持
well-established 已确立的；完善的
enforcement a. 实施，执行
rigorous a. 严格的
qualifications n. 资格
govern v, 管理
standing committee 常务委员会
oversee v. 监督
discipline v. 执行纪律
in breach of 违反
criteria n. (criterion的复数形式)标准
VAT 增值税（全称为 value added tax）
Shortfall n. 亏空，不足
Hedge v. 保护，防御
Underlying a. 基本的，根本的
Co-opt v. 将…选为（或指定为）新成员；指定….为同事（助手）
Practitioner n. 开业者
Expertise n. 专门知识
Sophisticated a. 先进的，尖端的