3 European bourses in meger talks

Ulhas Joglekar ulhasj at bom4.vsnl.net.in
Thu Mar 16 17:24:25 PST 2000


16 March 2000

3 European bourses in meger talks By Huw Jones LONDON: Belgium's Finance Minister said on Wednesday that talks between the Paris, Amsterdam and Brussels stock exchanges were at an advanced stage, signalling that a long-awaited shake-up in Europe's bourses looked near. "There are multiple projects of mergers between various bourses - two, three or five," Didier Reynders told a Brussels news conference. "It is true that projects are particularly advanced between Brussels, Amsterdam and Paris." "We are talking about possible cooperation, but there are no formal decisions yet," Amsterdam Exchanges spokesman Raymond Salet told Reuters. Paris, Brussels and Amsterdam are part of an eight-bourse alliance set up in 1998, led by the London Stock Exchange and the Deutsche Boerse and including Milan, Madrid, and Zurich. A merger would be the first cross-border stock exchange consolidation in Europe. Paris Bourse, continental Europe's biggest stock market, also confirmed it was in cooperation talks. "Whether these are merger talks, I cannot confirm or deny," Paris Bourse said. "It is cooperation talks, but I cannot say what will be the scope of that cooperation. All the bourses are in talks over the synergies they can create." This year, Europe's exchanges are set to feel the emergence of new competition from electronic rivals such as Tradepoint , a revamped Easdaq, the Brussels-based pan-European stock exchange, and plans by the U.S. Nasdaq high-tech exchange to set up a European sister market. Hanging on to liquidity or trading volumes in leading stocks is a must for exchange survival. Belgian newspaper De Standaard said the bourse talks focus on Paris becoming the market for blue chips, Brussels the core market for small- and medium sized companies, and Amsterdam the centre for derivatives trading in futures and options. Analysts backed the concept, modelled on Canada's stock market set up where Vancouver, Toronto and Montreal specialise in different market segments but are all linked by one platform. "If such a deal could be negotiated, it would help solve a number of strategic problems that each of the exchanges is facing," said Nic Stuchfield, a stock exchange industry consultant and former head of Tradepoint. "There is the relative lack of progress France is making in derivatives, the potential vulnerability of Holland being dominated by a relatively small number of highly international stocks, and the absence of significant blue chips in Belgium," Stuchfield said. The Belgian exchange is down 21 percent this year, due to its lack of high profile tech, media or telecom stocks whose rally has pushed rival bourses to record highs. Belgium, Amsterdam and the small Luxembourg exchange have already set up an electronic alliance in stocks. Consolidating the Paris, Amsterdam and Brussels growth stock segments would also create a counterweight to the dominance of the Deutsche Boerse's Neuer Markt in Continental Europe. It would also put Paris in a stronger position as it is already developing electronic links in a separate, looser alliance with the Swiss Exchange and the Italian Bourse. Big investment banks want a platform to trade cross-border more easily after the euro created a single market in stocks, shifting the focus to sector rather than national lines. The alliance failed to agree on a common platform for blue chips and will instead launch a "virtual" exchange in November which creates an electronic interface between all eight. "We bourses must be in the position this year to deliver a European platform for blue chips," Antoinette Hunziker, head of the Swiss Exchange, said this week. "If we cannot, then banks will have to create their own because of cost pressure." Many believe the alliance is effectively dead and there are clear signs of individual bourses taking initiatives to beef up their competitive edge. London has already said the way forward is probably through mergers rather than alliances. On Wednesday, London Exchange members are likely to approve a plan to demutualise in order to tackle competitors more nimbly and be in a position to merge or mount takeover bids. In May, the Deutsche Boerse is set to unveil plans to float. The Paris Bourse is looking to float next year with the Helsinki stock exchange also mulling a similar move. (Reuters) For reprint rights: Times Syndication Service
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