Chairman's Statement

London Stock Exchange
9 October 2000

                                                                7 October 2000

                 APCIMS CONFERENCE - DON CRUICKSHANK'S SPEECH

Attached is the text of a speech given by Don Cruickshank, chairman of London
Stock Exchange plc, to the annual conference of the Association of Private
Client Investment Managers and Stockbrokers (APCIMS) at the Conrad
International Hotel, Brussels, at 10.15 a.m. on Saturday 7 October.

Key themes from the speech:

Accountability - a new consultation structure - the Exchange Markets Group -
chaired by Don Cruickshank, including representatives from the whole market
and supported by a number of new consultative groups with a more specific
focus on aspects of the market.

Segmentation - a new market focus recognising the differing needs of users by
setting up executive teams within the Exchange in order that focus can be
segmented to meet the separate needs of the domestic and retail market and the
wholesale and international markets.

Internationalisation - strengthening our international position by building on
the Exchange's strong international base, creating a European Growth Market
based on techMARK and repositioning techMARK and AIM as broad international
markets.

Inefficiencies in the market - dealing with remaining inefficiencies in the UK
market - specifically stamp duty, dematerialisation and central counterparty.



For further information

London Stock Exchange

Kay Dixon                              020 7797 1222

Jeremy Hughes

Schroder Salomon Smith Barney

Philip Robert-Tissot                   020 7986 4000

Brunswick

Derek Bainbridge                         020 7404 5959

David Brewerton

Schroder Salomon Smith Barney, which is regulated in the United Kingdom by The
Securities and Futures Authority Limited, is acting for London Stock Exchange
plc and no one else in connection with the offer by OM and will not be
responsible to anyone other than London Stock Exchange plc for providing the
protections afforded to its customers or for providing advice in relation to
the offer by OM. Schroder Salomon Smith Barney has approved this press release
for the purposes of Section 57 of the Financial Services Act 1986.





PLEASE CHECK AGAINST DELIVERY



                       SPEECH TO THE APCIMS CONFERENCE

                              By Don Cruickshank

                     Chairman, London Stock Exchange plc



                                7 OCTOBER 2000



I'm very pleased to have the chance to speak - and to take questions - at your
annual conference. I see it as very important for me to be visible to
customers; to listen - seriously - to customers; and to act in the best
interests of customers.

That means bringing forward strategies and proposals that have your support
and meet your needs. What I will not do today is to set out a complete
strategy for our future. It is simply not consistent with the desire that you
all have for full consultation on such a strategy and secondly the need to
have a well thought through strategy. What I hope I can do today is to give
you some flavour of the strategic direction and the approach we will adopt in
developing that detailed business strategy.

Reality for me is that you and our other customers may, on any one issue, have
differing requirements and different views of the future. But I think it's too
easy to dwell on this divergence of views based on the very differing needs of
a diverse marketplace. And dangerous too. For it is that very diversity -
represented by the total community of the Exchange - that provides the
underlying strength that gives confidence to users of our markets, who,
incidentally, themselves range from small private investors to, literally,
some of the biggest investment funds in the world. And in a market such as
ours, confidence is all important. Users want to be sure that prices are
reliable; that supervision practice is fair; that costs are fairly spread. In
short, the sort of place they want to do business. I'm very firmly of the view
that the Exchange has an absolute obligation to ensure that it provides
efficient markets for all its users: whether domestic or international;
whether wholesale or retail.

I hardly need mention that the last few weeks have not been easy. Indeed, it
has been drummed into me over the summer that for some time, a long time, you,
as members of APCIMS, have had concerns that you feel the Exchange has not
properly addressed. Some of you took the opportunity of our AGM to voice these
concerns. Let me say this. We hear you. We take the message very seriously.
And in a minute I'll talk about how we, together, can set about addressing
your concerns. But I hope you will agree that whatever the issues of the past
- and I apologise for those times when we got it wrong - we must now move on,
constructively, building on the great strengths of the London market. We must
ensure that the difficulties of the past neither cloud our underlying strength
nor undermine our strategy for the future.

There are at the moment three streams of work for the management team at the
Exchange; seeing off the OM Gruppen bid: building the business: and planning
the future.

Firstly, we must see off the bid from OM. That is focussed on the next few
weeks. You will have seen our two responses to their offer, which the Board
believes undervalues the business and provides nothing new for customers.

Without going through the details now, I can confirm my view that it is a poor
deal for shareholders and customers alike. Many of you here today fall into
both categories. For you, OM's proposed deal would be double trouble.

Secondly, building the business: get the governance and management right:
behave and act commercially: make the rhetoric of customer service real. Some
of what this means in practice I'll touch on today. More will follow.

And thirdly, what of the future? We are a strong company, building on a fine
track record. We don't have to do deals. We may at some future time wish to do
so. But we don't have to. Our strategy is to develop an even stronger business
that will provide value to our shareholders and will meet the needs of our
customers. That will strengthen our hand in any future industry
rationalisation and in seeking the right partners in the future.

But today, I want to focus on you as customers.

Now is the time for us to listen; to listen to our customers and to listen to
what you want as the next stage of development for your market.

We've spent a lot of the last two years pursuing a strategy based on the need
to create a pan-European market - primarily for wholesale trading, although
also to support retail trading. We pursued that because the general view here
in the UK and in the EU, and in the US was that the creation of a single
market would require an integrated pan-European Exchange structure.

We heard from many of our customers that liquidity is sticky - sticky in the
sense that it would be extremely difficult to shift it from a single Exchange
- especially an Exchange that already offers efficient cost effective trading.

The result of those two hypotheses - that a pan-European Market was needed,
and that liquidity would stick to the national Exchange - led us to believe
that the only way that we could create a pan-European market was to work with
other Exchanges within Europe, using the goodwill of those Exchanges and their
members to bring together the broader European market.

In order to get that goodwill some compromise was inevitable. The particular
compromises we reached were designed to allow the structure of our markets to
be split between different regulatory regimes, but ensure that those
regulatory regimes operated to a common standard.

In our minds, there was never any question that the standards could ever fall
below those with which you and others were familiar - particularly on
transparency issues and on listing arrangements. So, as it became clear that
we were unable to make sufficient progress on ensuring that UK standards and
structures would prevail, we were obliged to withdraw the merger proposal.
There is a question, therefore, as to whether you would want to see this
organisation participate in any restructuring that did not have clearly at its
core standards equivalent to UK regulation. We have to explore this in some
detail in the debate we are having on strategy with you and other market
users.

But it also means that we didn't listen carefully enough. Oh, we could claim
that the obstacles, we faced, especially on the regulatory front, were more
serious than expected. Or that we didn't orchestrate changes in clearing and
settlement well enough. All that's true. But I think the key lessons are that
you want: an Exchange that is accountable to its shareholders and customers;
an Exchange that allows effective input to its decision making; and an
Exchange that operates under the high standards of UK regulation.

So it is with these lessons firmly in mind that I want to address today
accountability to all our customers, the segmentation of our market, the
internationalisation of our market, and dealing with structural inefficiencies
in our market.

Let me start with accountability. Having pursued a strategy that, I was told,
was broadly demanded by many of our market users, it's become crystal clear to
me that the Exchange's strategy needs the support of all our customers. And to
reinforce that, note that firms representing over 80% by trading value own
just 17% of the Exchange's shares. Hence the stress on accountability to you
as customers. We can only achieve this through hard work. Warm words will not
do.

This starts with the creation of the new consultation structure which we are
putting in place. It'll have at its core an Exchange Markets Group, which is
directly in touch with the Board. I intend to chair this group. I intend to
ensure that the representation on, and the contribution from, this group is
broadly drawn from the market as a whole - retail brokers, investment banks,
corporate advisers, investing institutions and other key groups that make up
the market as a whole.

This group will talk directly to the Board. It will provide its own
independent advice to the Board. And where necessary, we'll ensure that it has
the resources to conduct its own research, independent of the Exchange.

In addition, in order to ensure our ability to deal with the complex and
important issues that we face, this group will be supported by a number of new
consultative groups which have a more specific focus on aspects of the market.

These will include the retail broking segment of the market; corporate and
advisory issues for AIM, techMARK and the majority of our main market; and
institutional investors and issues related to corporate governance.

It's important for us that this new structure is successful, is listened to
and is able to provide the right level of input in helping your Board make the
right decisions.

As I stressed, my first theme is accountability. I hope that this structure,
together with my personal commitment to you that we will listen and be
accountable, will together ensure that our strategies are in line with our
customers' needs.

My second theme today is segmentation - a rather grand word for thinking about
our customers and market in finer detail. It is clear that one of the problems
in delivering any strategy is the different interests of customers seeking a
broader wholesale European market and customers seeking better, more cost
effective services to support domestic and retail markets. In trying to
provide one solution for all we have not been able to meet valid, specific
needs.

We must address the fact that SETS, our automated trading system, does not
meet the needs of the retail community. Although SETS has helped to drive cost
out of the industry and has reduced spreads, we know - because you tell us -
that you don't like it and you don't use it because it doesn't match your own
and your customers' needs. I am therefore setting up new executive teams
within the Exchange so that we can segment our focus, our systems and service
development, to meet the quite separate needs of the domestic and retail
market and the wholesale and international markets.

As regards management of these initiatives, I have asked Chris Broad, one of
our very best people, and a member of our Executive Committee, to take
specific responsibility for ensuring the delivery of an efficient service to
support retail trading. He is charged with delivering to you in the key areas
that I know you wish to see. This will include how we bring forward a service
that both provides additional value to you and dovetails with the current RSP
structures.

It will also include an approach to improve the efficiency of our market
overall by dealing with some of the infrastructural questions such as
dematerialisation, settlement cycles and stamp duty, and thirdly Chris will
ensure that you feel it's a welcome back to your Exchange. I will personally
ensure that Chris has adequate resources - both people and money to deliver
this.

The flexibility of our technology means that we have the necessary
infrastructure to increase our support for retail business. We have a number
of proposals to meet the needs of the retail market that we would now like to
discuss with you in more detail and in the next few weeks we will be
discussing with you exactly how to move forward.

Let me also say that one of Chris's personal objectives will be to bring a UK
retail perspective to all the Exchange's developments and plans. We must avoid
any unintended adverse effects from changes designed to serve other customer
groups. The central counterparty proposals are a good example.

In summary, segmentation, my second theme, is about recognising that the needs
of the wholesale and the global market can be met while meeting the needs of
the retail and domestic market. We will marshall our resources to ensure that
we are able to provide adequate focus to those differing needs. We will not,
as I suspect has happened in the past, see the needs of the UK retail market
relegated to a second priority.

I know from discussions that I have had with several of you in recent weeks
that you also have concerns about arrangements for smaller companies. I cannot
stress too strongly the importance that we attach to the proactive promotion
and development of techMARK and AIM. Last year, AIM out-performed all other
key indices and the number of companies on the market continues to rise. Since
its launch last year, techMARK, too, has been a great success with the number
of companies rising from 180 to 250.

We shall continue to develop specialised market segments, adding to techMARK
and extraMARK - our new market for Exchange Traded Funds - and again, we look
forward to discussing with you how best we can ensure any such market segments
are developed to meet the needs of yourselves and your clients.

My third theme is the internationalisation of our services. We already have
the most international market in the world. We list more securities from more
countries than any other equities exchange. We have significant inward
investment into UK securities, focused to a large degree at the very liquid
end of the market but also into smaller and mid cap companies.

You all know that over the last few months we have been looking to establish a
European Growth Market. The need for such a market to provide liquidity,
access, visibility for a broad range of European securities hasn't gone away.
So, for the future, we are committing to reposition AIM and techMARK as broad
international markets. To this end we will be adding a significant marketing
spend to extending the reach of these markets and their profile across Europe.
We will be seeking listings from other European jurisdictions. We will seek
new members. We will seek to recruit nominated advisers from other
jurisdictions.

We have already seen significant success with techMARK gaining listings from
Israel, Canada and other overseas countries. Our aim is to grow this
significantly over the next year to create a European Growth Market based on
techMARK. I have asked Tim Ward to take on this role. Tim, as many of you will
know, was the prime architect behind techMARK and is ideally positioned to
take this forward.

This then is my third theme - the internationalisation of our services.

Improved accountability; better segmentation; more internationalisation: these
will drive improvements to the services that you need.

However, together we also must take great care to ensure that some remaining
inefficiencies in the UK market are dealt with. I have three particularly in
mind.

First, stamp duty. As I met you over the summer this was a subject that was
raised again and again. I said it was in my in-tray and was not being
forgotten. It hasn't. And I may even be making some progress here. It's
important for individual citizens who want to save; for you who serve them;
for the Exchange as a commercial entity; and for UK jobs and competitiveness.

Second, dematerialisation. This is not something I have taken any initiative
on as yet, but if you as APCIMS were minded to make a concerted push, then my
personal commitment and the Exchange's resources would be behind you.

Third is the importance of the Exchange/LCH/Crest plan to introduce a UK
central counter party on 26 February 2001. The plans are on schedule.

This is an important development. It will make SETS a more effective trading
mechanism and improve the quality and consistency of prices that you rely on.
I realise that for some of you, this is yet a further barrier to your direct
use of SETS - it is important therefore that we deliver you the retail trading
services that I promised earlier. The costs of the Central Counterparty will
be borne by the direct users of SETS - they get the most benefit. But
remember, the quality and integrity of our price formation process is a
benefit to all users of the market.

Some might have expected me to add technology to the list of inefficiencies to
be dealt with. But far from it.

We have a strong technology base. We are not in the market to replace
wholesale our technology. Don't draw the wrong conclusion from our choice of
Xetra in the merger process. Don't be drawn by the siren 'gee whizz' noises
from OM - and others. We have a modern hardware architecture, shared with
telecoms, IT and internet companies. The systems both in terms of overall
capacity and intensity of transactions can accommodate many times the present
demand. The systems performance in terms of functionality, speed of response
and reliability meets the needs of our most demanding customers. And it is
capable of being developed to serve markets other than cash equities markets.

I could go on. But suffice it to say that we are able to meet the demands of
the market - demands from you, our customers. I believe that the trinity of
improved accountability, better segmentation and more internationalisation
will strengthen our relationship with you. We are committed to a strong,
efficient market that allows you to transact your business in the way that
suits you, your businesses and - ultimately most important of all - your
clients.