Sterling hurdle to cross-EU stockmarket

Homepage of the Jiway cyber-exchange, which launched on Friday

Sterling and an unpopular trading levy are obstacles to adding London's stock market to the nascent pan-European exchange Euronext, the operation's head has said.

George Moeller, Euronext's chief operating officer, on Friday said that the Lisbon bourse looked likely to be the next partner in the exchange, launched in September as a merger of Amsterdam, Paris and Brussels markets.

Certain issues 'would have to be resolved' if London's stock exchange, which is thought to be being wooed by a number of potential partners, were to join Euronext, Mr Moeller said.

Unlike some Continental nations, the UK retains stamp duty on share dealings, despite campaigns by City investors for its abolition.

Apcims, a stockbrokers' and investment managers' association, last week warned that stamp duty on share trades needs "to be reviewed urgently if the UK is not to lose ground in international equity trading".

Sterling hurdle

The denomination of shares in pounds rather than euros, as Euronext uses, was also a psychological hurdle, Mr Moeller said.

There's clearly a greater sense of consolidation in the euro countries than the non-euro ones

George Moeller, Euronext

In negotiating the launch of Euronext, the inclusion of Belgium, France and Holland in the single currency zone "took away a block" between potential partners, he said.

"There's clearly a greater sense of consolidation in the euro countries than the non-euro ones."

But he restated Euronext's willingness to resume talks with the London Stock Exchange on a merger.

Global trading

A merger would boost the development of a continuous global market, which Mr Moeller said would be set up within two years.

The organisation of a worldwide market would allow orders to be carried between exchanges covering different time zones.

But this development would not necessitate the formation of a single exchange, but closer partnership between existing ones.

"It would be difficult to catch all the liquidity in Europe. There is no single exchange in the US, and Europe should probably take that as an example."

Cyber-exchange launched

His comments come on the day the pan-European cyber-exchange Jiway, backed by investment bank Morgan Stanley Dean Witter and technology firm OM Group, opened for business.

By lunchtime the electronic bourse, where 320 firms are listed, had taken 200 trades, with French insurer Axa proving the most popular stock.