London Stock Exchange Readies Low-Cost Quote Service Using BBC Data Broadcasting Technology

The London Stock Exchange is preparing to launch its first low-cost market data service. Its purpose is to make real-time quotes available to a broader market, thereby furthering the current U.K. strategy of promoting widespread share ownership.

"Its aim is to take information out to that wider audience that is interested now in shares and share dealing," says Chris York, who heads the project at the LSE's Advanced Marketing Group. It is "also aimed at those who wish to provide services to this new audience." The service now goes by the name of "Project Prophit," a name "not set in concrete," he says. Like low-end quote services in the U.S., Prophit uses broadcast transmission to reduce line costs and produce a less-expensive product.

Prophit, which has been testing for several months, will begin commercial operation at the end of the first quarter of 1987, York says. It uses the BBC's "Datacast" system, which encodes the quote information into the vertical blanking interval (VBI) of the BBC's television signal (MTR, October 1986). Datacast provides full coverage of the U.K. and also reaches parts of the Continent.

Unlike most low-end U.S. quote services, however, Prophit does not rely on an IBM-PC as its terminal of choice. The service can be received in real time only on a custom terminal manufactured by the Bishopsgate Terminals Ltd. unit of Alphameric PLC. An RS-232 output is available for PC use, says York, but will only provide prices on a one-hour delay.

Why no real-time quotes on a PC? "It would give us support problems in the first year that I don't think we'd be interested in," answers York. The LSE wants to assert tight control over the delivery and presentation of market data so that public confidence in the reliability of Prophit's quotes will remain high. At this early stage, it seems, the British public must be spoon-fed their prices. Later on a real-time feed for PCs may become available.

The initial Prophit service will offer quotes on 1,000 U.K. equities, international equities traded in London, and traded options, says York. Later, foreign exchange rates, company news, and broker commentary may be added. The price will be about 92 pounds per month.

To sell Prophit to its intended audience of private investors, financial planners, banks, building societies, accountants, and lawyers, the LSE must learn some new marketing tricks. The direct sales approach used with Topic is just too expensive. As a result, the exchange has created a mass marketing organization to specialize in direct mail, telemarketing, and dog and pony shows.

Prophit is not without its competitors. U.S. quote vendors like Telemet America, Inc. and Commodity Quotations, Inc. plan low-end services in the U.K. (see related story, this issue), and Reuters is expected to begin a broadcast quote feed using a system similar to the BBC's in the near future. Nonetheless, York believes that the British public -- just now getting its feet wet in the markets -- will opt for Stock Exchange data. "If they're going to take real-time prices from anywhere, it'll make more sense for them to take it from the Stock Exchange," he says.