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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