Global Capital Markets

Euroclear Bank and Clearstream Banking Luxembourg have agreed a programme of improvements to the automated day-time bridge between the two ICSDs, which has caused friction between them and between them and their clients for nearly 20 years.

Delivery of the first enhancement, which is scheduled for January 2007, aims to improve overall settlement efficiency for the ICSDs' respective clients and increase the capacity for same-day transaction settlement and securities financing across the Bridge. They says further details about what exactly this means will be communicated "in due course," but they promise the initial enhancement to the daytime Bridge will:

First, increase settlement opportunities, particularly for trades settling on T+0, for clients with the addition of three new file exchanges of settlement-related information in the afternoon (from 7 to 10 times per day);

Secondly, provide more timely and frequent transaction-repair and fail-management information to clients as a result of three new exchanges of transaction-matching files (from 17 to 20 times per day); and extend instruction input deadlines for clients by more than one hour for key settlement cycles during the day.

The two ICSDs says they are "committed to making continuous improvements to the Bridge in order to support international capital market professionals with fast, efficient and reliable settlement between the ICSDs." They have set up a "forum to define and deliver further enhancements to the Bridge in line with market needs. This initiative aims to maximise same-day financing and transaction-management possibilities for the global market place across the Bridge."

"The evolving interoperability between Euroclear Bank and Clearstream Banking Luxembourg is a shining example of market-driven co-operation," says Martine Dinne, CEO of Euroclear Bank. "We are committed to working with Clearstream on future developments that increase efficiency and liquidity, while reducing risk for the market."

Jeffrey Tessler, Chief Executive Officer, Clearstream, adds that the programme of improvements will "benefit clients by allowing them to use the infrastructure to efficiently support their trading and collateral management activities." The first electronic overnight Bridge was launched in 1993. Numerous upgrades to the Bridge have taken place since its launch, of which the latest was the introduction of a supplementary, automated daytime Bridge in November 2004

FT.com / Lex - Soci�t� G�n�rale/Russia

London Stock Exchange - LONDON STOCK EXCHANGE LAUNCHES EXCHANGE TRADED COMMODITIES MARKET SEGMENT

Credit Agricole, the French financial services group, might again be considering a takeover bid for Alliance & Leicester, a Daily Express market report said.
Agricole earlier in the year admitted that it was considering an offer for Alliance & Leicester, its UK-listed rival. However, the French group did not proceed with an offer.
A Daily Mail market report noted talk that Banco Santander, the listed Spanish bank, is prepared to offer GBP 6bn (EUR 8.8bn) for Alliance & Leicester. Neither report attributed the claims. Alliance & Leicester shares were up 41p at 1113p, valuing the company at GBP 5.01bn (EUR 7.42bn).

Source Daily Express, Daily Mail

Lloyds TSB, the UK-listed bank, could be a bid target for BBVA, its listed Spanish counterpart, according to a Daily Express market report.
The item did not attribute the speculation. Lloyds shares gained 4.5p to 537p on the talk, valuing the group at GBP 30.66bn (EUR 45.50bn).

Source Daily Express

Telegraph | Money | London's turn to play double your money

FT.com / Home UK / UK - Company bill 'first step' of reforms

The US auditing regulator has denied accusations of ‘regulatory creep’ after it emerged this week that it had sent its inspectors recently to the London offices of Big Four auditor Ernst & Young.

The Public Company Accounting Oversight Board has described as ‘routine’ its visits to E&Y’s offices in early August and September. The visits were carried out in collaboration with the Financial Reporting Council and are understood to have involved PCAOB staff interviewing accountants and examining documents relating to selected clients.

PCAOB Chairman Mark Olson told the Financial Times: ‘I was surprised at the reaction. We accompanied the UK inspectors in that effort. It was a collaborative process.

‘We're looking to try to determine the extent to which we could rely on each other's work’ he added, but: ‘in not all instances will their work overlap with what we need to do in order to complete our inspections. But we are looking for ways to utilise each other's work. What we're going to do is try and understand our approaches first.’

The news about the PCAOB visits came out just a few days after Ed Balls, economic secretary to the Treasury, announced plans for a law which would help protect the City of London in the event of the London Stock Exchange being taken over by US exchange Nasdaq. Former Securities and Exchange Commission chairman Harvey Pitt described Mr Ball’s plans as ‘unilateral turf-protecting’.

The European Commission has commissioned a research report to understand an important corporate governance issue: the proportionality between ownership and control. This study is part of the Commission's efforts to base any policy initiatives it might wish to take in this area on objective data.

Institutional Shareholder Services (ISS), the proxy voting agency, has been appointed to conduct the research in collaboration with law firm Shearman and Sterling LLP and the European Corporate Governance Institute (ECGI).

"The study represents the essential starting point for any further discussion on the adequacy of control to capital," said Charlie McCreevy, European Commissioner for Internal Market and Services. It will provide a full, systematic picture of the essential features of Corporate Europe that the European public opinion is waiting for. Any discussion about how to move on, about possible initiatives in this area, needs to be based on sound facts."

To date, says the Commission, there has been no comprehensive, factual analysis on control enhancing mechanisms in corporate governance. ISS will produce a profile of the structure of over 450 companies in 16 EU member states. It has also been asked by the EC to survey investors in European and international markets about their views on control-enhancing mechanisms. The report will include an overview of European regulatory frameworks by Shearman and Sterling plus a review of existing theoretical and empirical research by the ECGI, which will both contain a comparison with the situation in some key jurisdictions outside the European Union.

"With so many different legal frameworks and market practices across the European Union, this is no small exercise," says Jean-Nicolas Caprasse, Managing Director of ISS Europe. Our remit is to conduct a comprehensive and factual analysis across the EU, which will lay the groundwork for informed decision making."

"Shearman & Sterling is delighted to take part in this study on control enhancing mechanisms, which are widespread in Europe, the United States and throughout other jurisdictions," adds Christophe Clerc, from the firm's Paris office. "We have been advising on these issues for a long time, and we look forward to sharing our experience and collaborating with both our partners in this project."

"The ECGI is enthusiastic about contributing the latest academic knowledge and thinking to this study," says Marco Becht, Executive Director of the ECGI. This project is totally in line with our mission to further corporate governance through independent scientific research."

If their proposed merger goes forward, NYSE Group Inc. and Euronext N.V. plan to create separate legal entities on each side of the Atlantic to protect them from overseas regulations, according to documents filed with the SEC. Under the plan, the NYSE would be run by a Delaware trust, while Euronext would be structured as a Dutch foundation.

Telegraph | Money | ICAP prepares new bid for the LSE

IR magazine- a Cross Border publication

IR magazine- a Cross Border publication: "Sox need not be bad news for US-listed foreign companies "

IR magazine- a Cross Border publication

FT.com / Home UK / UK - STOCK MARKET OPERATOR OMX PLANS TO ACQUIRE ICELAND'S ICEX IN SKr250m DEAL

FT.com / Companies / Financial services - Banks aim to challenge exchanges

Telegraph | Money | ¬21bn bid to create 'super' exchange

BBC NEWS | Technology | Virgin bans 'fire hazard' laptops

Russian largest gold producer, Polyus Gold, is starting a 10-day roadshow today to announce its USD 1bn buy back and plans to list on LSE by the end of this year.
Reports in Vedomosti and Kommersant referred to Polyus Gold's new growth strategy targeted by 2015. Polyus Gold incorporates gold assets of the listed Russian metals giant, Norilsk Nickel. Kommersant and Vedomosti cited a source close to Polyus and wrote that Deutsche Bank is a lead manager of the buy back.
Currently, about 45% of Polyus is in free float and the company has a market value of USD 8.25bn, Kommersant wrote. The Vedomosti source said that subsidiaries of Russian holding, Interros, will sell a part of its stake in Polyus, suggesting it will be no more that 5%. The main owners of Polyus Gold are Norilsk Nickel’s director general, Mikhail Prokhorov, and Interros president, Vladimir Potanin.
Vedomosti cited an earlier Potanin statement that said the main shareholders of Interros and Polyus will be gradually reducing their stake in the companies, but not below a controlling interest.
As a result of the buy back, about 8% - 10% of Polyus‘s stake will be taken by Polyus’s subsidiary, Jenington (JVS). Later, this stake will be used in asset swap deals with western companies, both papers said, citing the Polyus’ source. Vedomosti cited specialists who noted that the changes in Polyus could mean that the company is preparing for either buys of gold assets, or an IPO.
According to its new strategy, Polyus expects to gain market value of USD 14bn – USD 16.5bn by 2015.

Source Vedomosti, Kommersant
Value USD 1,000m (Polyus Gold buy-back)

Russian largest gold producer, Polyus Gold, is starting a 10-day roadshow today to announce its USD 1bn buy back and plans to list on LSE by the end of this year.
Reports in Vedomosti and Kommersant referred to Polyus Gold's new growth strategy targeted by 2015. Polyus Gold incorporates gold assets of the listed Russian metals giant, Norilsk Nickel. Kommersant and Vedomosti cited a source close to Polyus and wrote that Deutsche Bank is a lead manager of the buy back.
Currently, about 45% of Polyus is in free float and the company has a market value of USD 8.25bn, Kommersant wrote. The Vedomosti source said that subsidiaries of Russian holding, Interros, will sell a part of its stake in Polyus, suggesting it will be no more that 5%. The main owners of Polyus Gold are Norilsk Nickel’s director general, Mikhail Prokhorov, and Interros president, Vladimir Potanin.
Vedomosti cited an earlier Potanin statement that said the main shareholders of Interros and Polyus will be gradually reducing their stake in the companies, but not below a controlling interest.
As a result of the buy back, about 8% - 10% of Polyus‘s stake will be taken by Polyus’s subsidiary, Jenington (JVS). Later, this stake will be used in asset swap deals with western companies, both papers said, citing the Polyus’ source. Vedomosti cited specialists who noted that the changes in Polyus could mean that the company is preparing for either buys of gold assets, or an IPO.
According to its new strategy, Polyus expects to gain market value of USD 14bn – USD 16.5bn by 2015.

Source Vedomosti, Kommersant
Value USD 1,000m (Polyus Gold buy-back)

THE public may soon be able to buy a new range of government-backed savings products over the internet in a move by the National Treasury Management Agency to cut the high costs of providing retail savings accounts.
Chief executive Michael Somers said the NTMA is in discussions with a number of service providers about the new online products, which could include an index fund tracking the performance of government gilts. The eventual deal could be modelled on the NTMA's existing joint venture with Kerry-based financial services group Fexco, which operates the prize bonds scheme.
Any move towards webbased saving could spell further trouble for An Post which got 37.5m from the NTMA last year to operate existing governmentbacked schemes including savings certs, savings bonds and the post office savings bank. These schemes have attracted 5.7bn from savers, largely because returns are tax-free. Fexco received 7m for operating the prize bonds.
But the NTMA is disputing An Post's bill for operating these accounts, freezing the fees for the last two years. Somers said the NTMA pays a gross return of about 4% a year on savings certs but, after An Post has taken its cut, the public only gets 2.7%.
"We've ongoing difficulties with An Post over the administration charges they want us to pay, " he said.
"We've said we're not going to pay them anymore.
They're too high and a source of considerable annoyance."
Any move by the NTMA to bypass the post office by selling government savings online would further erode An Post's shaky revenue base. Last week the European Court of Justice ruled that government broke EU law when it gave An Post an exclusive 47.5m contract to distribute social welfare cheques.
The NTMA's relations with the post office are also threatened by An Post's decision to form a new joint venture with a DutchBelgian bank, Fortis, aimed at selling a broader range of financial services through the post office network.
"We don't have the capability of running retail savings products ourselves and that's why we'll need an outside service provider if we go ahead with these products, " said Somers. "It needn't necessarily be a bank. It could be an arrangement a bit like the one we already have with Fexco."
He said the government would have to approve any new products that the NTMA intends to introduce, although it is unlikely they would also have to be signed off by the Financial Regulator. "There's no risk associated with what we're at, " he said.

BBC NEWS World Europe Russia central banker shot dead

FT.com / Companies / Financial services - Clearing the floor: how a regulatory overhaul is helping rivals to close in on the Big Board

FT.com / Companies / UK - Ringfence to protect City if LSE is bought

BBC NEWS Business EU plans to ease banking mergers

BBC NEWS Business UK to set 'light-touch' LSE rules

Norilsk and Inco eyeing Talvivaara Mining - report
StoryNorilsk Nickel, the listed Russian metals company and Canadian miner Inco have expressed interest in the Finnish mining group Talvivaara Mining. This information came was reported in Kommersant, which referred to wire reports. Talvivaara holds licenses to develop the Talvivaara nickel filed and seeks a co-investor for the construction of a EUR 350m worth mine. To finance the project, Talvivaara plans to offer a part of its shares on LSE, hoping to gain EUR 100m. The remaining financials the company wants to receive from a strategic investor, Kommersant continued.
Inco and Talvivaara refused to comment, while Norilsk has not confirmed either denied news.

SourceKommersant"

LSE receives bid approaches from buyout groups, said to be seeking white knight bidder – report
Story
The London Stock Exchange (LSE) has in the past two weeks received a bid approach from a buyout group, according to a Daily Mail report. The report quoted a source close to the process who said LSE’s adviser Merrill Lynch has been approached by several financial bidders. According to the source, the buyout groups instigated the contacts, and were informed that LSE is not for sale. The report mentioned a potential GBP 2.6bn (EUR 3.8bn) estimated deal size for an MBO bid for LSE. However, industry executives cited by the report said Merrill Lynch had been hawking LSE and has indicated that the exchange’s management want a deal. The newspaper commented that LSE chief executive Clara Furse knows that an auction would be the best way to realize value for the group’s investors. Finding a ‘white knight’ bidder would inject a note of competition into any auction process, the report added. Nasdaq, the US-listed stock exchange, has a 25.3% stake in LSE, so is well placed to acquire its UK-listed counterpart, the report said. Nasdaq submitted a 950p per share offer for LSE in March, which the LSE rejected. Nasdaq’s restrictions on any further offers will be lifted on 2 October, the item concluded. LSE’s market capitalisation stands at GBP 2.59bn (EUR 3.82bn).
Source
Daily Mail

Russians hire a royal recruit - Sunday Times - Times Online

GlobalCustodian.com - Citigroup Appoint New Asia Chief To Strengthen Position: "Citigroup "

mergermarket.com: "OMX in early discussions to be bought by Nasdaq � report
StoryNasdaq, the US electronic exchange, is in early-stage negotiations to take over Swedish peer OMX, the Financial Times reported. The unsourced article said the potential deal does not affect Nasdaq�s interest in buying the London Stock Exchange, in which it is a 24.1% shareholder. However, the American exchange is thought to have wanted to wait until it could settle the LSE deal before carrying out any others, the item said.
OMX has previously been mooted as a takeover target for several suitors including the LSE, the report said. It added that OMX is believed to have made the first approach to Nasdaq.
Shares in the Swedish business were lifted almost 10% as rumours of the bid circulated the markets at the end of last week, giving the group a value of close to EUR 1.4bn, the article reported.
Both Nasdaq and Credit Suisse, adviser to OMX, declined to make any comment, the report said.

SourceFinancial Times
ValueEUR 1,400m (OMX value Friday 8 Sept) "

IR magazine- a Cross Border publication

NZX: Announcement of new Australian ECN

Telegraph Money Power duo in £20bn merger summit

Telegraph Money Breaking views

Telegraph Money Deutsche deal will mean Liffe is 'disbanded'

Nasdaq may pursue London Stock Exchange deal after May 2007 - research report
StoryNasdaq Stock Market, the listed New York stock exchange, could wait until May 2007 to make an offer for the London Stock Exchange, Citigroup reports.
Citigroup made the remarks in a 6 September research report, in which it ranked Nasdaq shares as 'hold' and 'high risk.'
The report discussed Nasdaq's ability to bid, as of October, on the roughly 75% of LSE that it does not presently own. While Nasdaq could move forward in the short term in a hostile bid, Citigroup said it sees a 'low probability' of this happening.
Instead, Citigroup indicated its analysts consider it 'likely' that it will be May 2007 before Nasdaq considers bidding. At that point, Nasdaq can present a 'full offer' for LSE.
Under current conditions, in the short term Nasdaq would have to offer a minimum 1,243 pence per LSE share. Citigroup said that Nasdaq could offer 1,300 pence per share and achieve a deal that would be accretive to 2007 earnings by 17%. However, the report said it considers the possibility of Nasdaq offering over 1,500 pence per share 'unrealistic.'
The report said there are hurdles to a potential deal, including Nasdaq's current debt level and stock price, European investor sentiment, and LSE management's lack of demonstrated interest. This last factor, the report said, may indicate LSE prefers other suitors or wants to remain independent.
Nasdaq has a USD 4.3bn market cap, according to the report. The company had previously offered USD 4.5bn f"

Nasdaq could try to buy the rest of London Stock Exchange in October - report
Story Nasdaq Stock Market, the listed New York stock exchange, could move to try and buy the rest of the London Stock Exchange, reported the Wall Street Journal. The unsourced report in the Wall Street Journal reported that Nasdaq, which owns 25% of London Stock Exchange, could attempt to buy the rest of the company in October. The report, which cited a personal familiar with the matter, noted that the Nasdaq doesn't expect to make a hostile bid for the rest of the London Stock Exchange although the London Stock Exchange is gearing up to fight off a hostile bid from Nasdaq. According to the report Nasdaq is opting to wait and see if the company is pressured by shareholders to engage in discussions with Nasdq. Nasdaq had previously offered USD 4.5bn for the London Stock Exchange.

Source Wall Street Journal
Value USD 4,500m (previous offer)

Euronext could try to getting bigger piece of a combined Euronext/NYSE - report
StoryEuronext, the pan-European exchange operator, could ask for a bigger stake in a combined Euronext and NYSE Group, reported the Wall Street Journal. The report, citing an analyst, reported that given NYSE's stock has declined, Euronext could try to get a larger share of the combined entity to make up for any risks associated in getting paid in NYSE shares. NYSE has a market value of USD 9.4bn, according to the report.

SourceWall Street Journal
ValueUSD 9,400m (NYSE's market cap)

08/09/2006
LSE: Nasdaq does not feel need to take action on LSE now, believes OMX rumour unfounded mergermarket
Story
Nasdaq does not feel the need to take any action vis-a-vis the London Stock Exchange when the deadline beyond which it can make a fresh bid falls on 2 October, it is understood. The US exchange feels pleased with its strategic investment in LSE and believes recent media reports talking of a possible bid were more related to the approach of the deadline, and to explaining Nasdaq's options than to any expectation of an offer, it was said. The US exchange has not had any meetings with LSE management since the usual round of visits made to shareholders following the UK exchange’s results three months ago, it is understood. Nasdaq believes a rumour that LSE is looking at buying Sweden’s OMX to be unfounded. LSE declined to comment. The US exchange feels LSE might need Nasdaq’s support for such a deal as a 25% shareholder in the UK exchange, it is understood. Earlier today a report by Citigroup speculated that Nasdaq could wait until May 2007 to make an offer for the exchange.
by Cathy Cooper
Source
mergermarket
Value
GBP 2,700m (market cap)

OMX shares jump on talk of bid from LSE

BBC NEWS Technology Airline bans 'fire fear' laptops

FROM SECURITIES INDUSTRY NEWS
Page One
September 4, 2006

Panel Proposes NYSE Proxy Rule Changes

By Chris Kentouris, Senior International Editor
September 4, 2006 - A New York Stock Exchange-sponsored committee has recommended a sweeping overhaul of the Big Board's decades-old proxy rules, calling for prohibition of so-called discretionary voting for corporate directors and further analysis of fees for mailing proxy materials to beneficial shareholders.

The working group also said that the NYSE should support efforts for issuers to improve communications with beneficial shareholders, although it did not specify how. Among the possibilities often cited by corporate issuers and transfer agents is mailing proxy materials to "street name" shareholders directly rather than through financial intermediaries.

The proxy working group was headed by Larry Sonsini, chairman of Silicon Valley law firm Wilson Sonsini Goodrich & Rosati, with major buy- and sell-side firms and some of the largest corporations represented, including Merrill Lynch & Co., Morgan Stanley, Vanguard Group, Exxon Mobil Corp., Pfizer and US Steel Pension Fund. According to know-ledgeable sources, the NYSE board could ratify the proposal affecting discretionary voting as early as October, though implementation may wait until Jan. 1, 2008 to give two newly created subcommittees the opportunity to present their findings to the NYSE. One subcommittee, on proxy fees, is led by Gary Glynn, director of US Steel's pension plan. The other, addressing direct communications, is headed by Exxon Mobil corporate secretary James Parsons.

"We are in favor of eliminating the discretionary voting for boards of directors but feel that issuers already communicate well with their street-name shareholders through their financial intermediaries," says Donald Kittell, EVP of the Securities Industry Association (SIA), which is holding a symposium on proxy issues on Sept. 14 in New York, where these proposals will be discussed.

The NYSE's Rule 452 allows broker-dealers to vote on behalf of beneficial shareholders for "routine items" if they do not receive the investor's vote ten days prior to a corporate meeting. Brokerages typically vote uninstructed shares in favor of management. Smaller and midsized issuers, as well as many mutual fund companies and larger issuers, favor the rule as it makes it easy for them to attain a quorum. (The ten-day rule does not apply to shares held through banks.)

The working group believes that the election of directors can no longer be considered a routine event in the life of a corporation," says the NYSE working group's report, which was completed in June and delivered to the NYSE board. "Directors have authority over the most fundamental issues of corporate governance today, while investors, regulators, courts and others have all recognized the critical role directors play in the life of a corporation."

Against Proportionality
The panel rejected a proportional voting requirement, in which unvoted shares are tallied by brokerages in the same proportion as those received. Charles Schwab Corp., for one, has adopted such an approach on routine matters voted at its own annual meetings. Many issuers also use proportional voting for shares in employee plans.

But the NYSE group opposed the premise, regardless of whether uninstructed shares are voted in proportion to all votes cast at a meeting or in proportion only to those designated by street-name holders who give instructions. The reasoning: Proportional voting assigns votes to shares that have not been voted by beneficial shareholders. Proportional voting may also increase the influence of shareholders who do vote-typically beneficial rather than registered-which can make it easier for companies to win approval for non-routine matters.

The group also declined to define parameters for "vote no" campaigns or other controversial elections that, classified as non-routine, would eliminate the broker vote.

Since 1937, the NYSE has been responsible for setting the policies-and fees-for broker-dealers and banks to communicate with investors holding their shares in street or nominee name. Currently, only financial intermediaries are allowed to select proxy agents for street-name shareholders and they are reimbursed by issuers according to rates set by the NYSE. The American Stock Exchange and Nasdaq Stock Market follow suit.

Up to 80 percent of investors hold their shares on the books of an issuer in the name of a financial intermediary; the rest do so in their own name. Broker-dealers and banks, which must mail proxy materials on behalf of issuers to beneficial shareholders, typically outsource the cumbersome, technology-intensive process to Automatic Data Processing (ADP), the biggest U.S. proxy mailer.

Raising the Fee Issue
Proxy-mailing fees have long been a contentious subject. A few large issuers and their transfer agents have argued for more than a decade that the costs of communicating with street-name shareholders are far higher than those for registered owners. Another bone of contention is ADP's role as a centralized billing and payment processor between 800 banks and brokerages and 13,000 issuers-and reimbursements to financial intermediaries for outsourcing proxy mailings to ADP.

In 2002, following recommendations by a proxy-voting review committee convened at the suggestion of the SEC-it was chaired by American Express Co. and had representatives from the key constituent groups-the NYSE reduced the cost of mailings from 50 cents to 45 cents per beneficial shareholder. It also lowered the incentive fee for eliminating mailings from 50 cents to 25 cents, but only for companies with more than 200,000 street-name shareholders. Still, some issuers maintained that the price cut wasn't steep enough and disputed ADP's analysis of how proxy fee changes would affect the total proxy compliance costs incurred by large and small issuers.

"At the time the fee review was completed, only ADP provided information on what it cost to do mailings. There was never any independent analysis," recalls Claudia Holcombe, managing director of transfer agent Computershare, who advocates an independent analysis of proxy fees. But that committee ultimately concluded that the cost incurred by issuers for maintaining registered shareowner accounts far exceeds that of street-name shareowners.

While she was executive director of shareholder services for AT&T, Holcombe testified before a previous proxy review committee as president of the Corporate Transfer Agents Association, now the Shareholder Services Association. The trade group, which represents issuers, has often pointed out discrepancies between what issuers pay for proxy mailings to registered shareholders and fees charged by ADP for street name. The 2002 panel noted that services provided for mailing proxies to street-name shareholders were "very different, more comprehensive and much more complex than the services provided for registered processing."

Counters Charles Callan, SVP of regulatory affairs for ADP, "The NYSE acknowledged the need to address total costs incurred by issuers, not just proxy fees. ADP has been responsive-during the 2006 proxy season, over 45 percent of physical mailings were eliminated, up from 27 percent in 2002. This has resulted in hundreds of millions of dollars in additional cost savings to issuers. In contrast, statistics on total cost savings are not reported for registered processing."

Rekindling the debate over proxy-mailing costs, the SEC floated a proposal late last year to require that proxy statements be delivered on the Internet unless investors expressly request paper documents. The SIA, some issuers, fund managers and even shareholder activists opposed the idea, warning of unintended consequences that would lower investor participation and raise issuer costs. If the SEC's proposal is adopted, the NYSE would have to reduce its proxy fees.

Holcombe endorses the proxy working group's recommendation that the NYSE evaluate fees and find ways for issuers to communicate and send corporate materials to shareholders directly rather than through intermediaries. "Given the move to scrap discretionary voting, some companies will want, or need, to communicate more frequently with beneficial shareholders, hence the push for direct communications," says Holcombe. "In a competing market environment, issuers would have the right to choose either their transfer agent, ADP or other qualified third party as proxy-mailing agent."

However, not all investors want companies to know their identities. As many as 30 percent of all street accounts, and the majority of accounts held by institutional investors, are "objecting beneficial owners," which means that the intermediary cannot reveal the name of the underlying client. Transfer agents, who often mail proxy materials to registered shareholders, could stand to benefit if tapped by issuers to send information to street-name shareholders. Atlanta-based Swingvote, a fledgling rival to ADP, already offers an automated platform that allows corporations to communicate with shareholders while protecting institutional investors' identities.