Goldman, Morgan squeeze fees

Goldman Sachs Group Inc, Morgan Stanley and investment banks in Europe are using the early success of new trading platforms they have backed to push exchange fees lower.

Goldman and Morgan Stanley, whose profit in the first three quarters is down 44 percent from last year, and brokers at firms such as Merrill Lynch & Co and Citigroup Inc have demanded European exchanges cut trading tariffs. The companies have won new clout by backing alternate trading platforms such as Chi-X Europe Ltd. and Turquoise and by urging rival bourses to set up shop in Europe. "Banks have been angry for some time about fees," said Benn Steil, director of international economics at the Council on Foreign Relations in New York and an expert on exchanges. "They've pointed out that volumes have grown and fees haven't come down. And in an environment like this, you can expect them to ratchet up pressure. They definitely have more leverage now with the likes of Turquoise and Chi-X."

A year after the European Union's Markets in Financial Instruments Directive made competition possible, new entrants are gaining traction, offering some cheer for banks as the industry confronts its worst year since the Great Depression. At stake are billions of dollars in trading revenue.