GNI the City trading house is preparing to take advantage of the anger felt by private client brokers at the Anglo-German stock

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GNI, the City trading house, is preparing to take advantage of the anger felt by private client brokers at the Anglo-German stock exchanges merger. GNI, the City trading house, is preparing to take advantage of the anger felt by private client brokers at the Anglo-German stock exchanges merger. The firm is working on the formation of its own exchange which will cater primarily for smaller brokers, many of which feel left out by the London Stock Exchange's merger with the Deutsche Börse - creating iX - believing it to have been driven by the interests of large institutional investors. The small brokers are expected to appreciate GNI's invitation to discuss an alternative market.GNI's plans are thought to envisage an electronic matching system bringing together buyers and sellers of small- and medium-sized British stocks.Already iX has raised some concerns among smaller brokers, including the cost of installing new systems, which is likely to top £400,000 for the smallest firm.Brokers also fear that the apportioning of stocks between London and Frankfurt by the iX deal, will leave many smaller UK firms out in the cold. One broker said: "Now you no longer have a trading floor, it doesn't really matter where you deal. As long as you get a price, you could be dealing through iX, the London Stock Exchange, or wherever.

All the Stock Exchange ever was, was a trade association."Apcims, the trade body for private client brokers, already has been involved in general discussions about creating an alternative to iX.Jiway, the alternative exchange backed by Morgan Stanley Dean Witter, the US investment bank, is believed to be working on plans along lines similar to those of GNI.The creation of a new market would make eminently good sense for Old Mutual, the South African insurer which in January acquired GNI's parent company, Gerrard Group. GNI already has its own electronic trading platform, Touch.In addition, a new exchange would suit Old Mutual's £27bn private client business, which is made up of Greig Middleton and Capel Cure Sharp.. They couldn't have done a better job if they had tried. In the space of just 13 months Treasury ministers have infuriated the world's most powerful technology companies, damaged the prospects of the country's fledgling dot-com industry and stifled the creation of thousands of British jobs They couldn't have done a better job if they had tried. In the space of just 13 months Treasury ministers have infuriated the world's most powerful technology companies, damaged the prospects of the country's fledgling dot-com industry and stifled the creation of thousands of British jobs. It all started out very innocently. Chancellor Gordon Brown noticed that the Inland Revenue was out of pocket. A handful of companies were reducing their tax burden by paying staff with share options.

As one former employee of a UK media group puts it: "I was living off my share options and my salary was my pocket money."The Treasury's solution was to slap a 12.2 per cent national insurance tax on share options in its Social Security Bill, published in April. This meant that when an employee cashed in his or her shares, the employer would foot the bill.The proposal was tucked away in a paragraph of the Bill and initially went unnoticed. But Amazon.co.uk, the online bookseller, was first to read into the implications. Because the dot-com recruitment market is so tight, Amazon uses share options as a sweetener to attract staff. It was concerned that its tax liability would run into millions. Simon Murdoch, its then UK boss, says: "We met the Treasury and I don't think they realised the impact of what they had done."As if it wasn't content with hitting the balance sheets of the hi-tech companies, the Treasury was hatching an accountancy change that would wallop freelance computer workers too.