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The BBC's Adam Kitley
"This would make buying and selling across Europe much easier"
 real 28k

Don Cruickshank, UK Stock Exchange
"Discussions are intense"
 real 28k

Thursday, 20 April, 2000, 16:34 GMT 17:34 UK
London: Blame the Germans
Excerpt of strategy paper
The strategy paper was mistakenly faxed to journalists
The London Stock Exchange (LSE) has confirmed that it is in merger talks with its Frankfurt rival, Deutsche Boerse.

However, in an embarrassing faux-pas, the exchange faxed a strategy document to journalists that suggests it plans to blame its German partners for any failure of talks, regardless of who actually calls off negotiations.


London Stock Exchange strategy paper
The one-page strategy paper could upset Deutsche Boerse's negotiators
According to the document, the LSE intends to stress the "intransigence of [the] Germans over regulation", and wants to accuse Deutsche Boerse's executives of having "no shared vision" of how to bring Europe's many stock markets together.

The merger talks are expected to take place over the Easter weekend, and a final agreement to merge or not to merge could come by Monday.

However, the fax blunder could seriously poison the talks. The strategy paper is an indication that London market bosses have little confidence in the outcome.

A spokesperson for the LSE said the document was outdated and should have been "aborted".

Deutsche Boerse declined to comment.

The fax mistake took the shine off the appointment of former telecoms industry regulator Don Cruickshank as the new chairman of the UK exchange.

Merger strategy

The merger talks have been prompted by increasing competition between European exchanges, driven by advances in technology and the globalisation of trading.

In a brief statement, London said it was "aiming to achieve rationalisation of securities trading across Europe and internationally".

"Discussions are taking place with Deutsche Boerse (Frankfurt) to see if a merger between the two exchanges can be the first major step in this process."

However, it said: "London's leading position in the trading of international securities gives it a pivotal role in the realignment of exchanges and it is not yet clear that a merger with Deutsche Boerse can be agreed."

Stock market shake-up

There have been on-off talks for some time between stock markets in Europe which have been facing a growing number of new rivals.

London and Frankfurt had talks last year, but differences have only led so far to a watered down agreement on harmonising hours and the prospect of a future shared trading platform.

Stock markets are being forced to merge to derive better economies of scale by having just one trading platform as advances in technology and globalisation of trading lower entry barriers.

Last month the Paris Bourse stole the limelight on the European stage by announcing it would merge with exchanges in Amsterdam and Brussels to create Euronext.

America's technology-dominated Nasdaq, the world's second largest stock exchange, is looking to launch a pan-European market early next year.

Mr Cruickshank arrives

Don Cruickshank, who recently published a damning report on the UK's banking industry, joins the board immediately and formally takes over from John Kemp-Welch on 25 May.

Mr Cruickshank was director-general of telecoms watchdog Oftel from 1993 to 1998 and led the UK's Millennium Bug campaign from 1997. He is also chairman of Scottish Media Group.

He arrives at the LSE a month after its 298 members voted to demutualise.

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See also:

20 Apr 00 | Business
Full text of LSE strategy paper
12 Apr 00 | Business
Exchanges lengthen hours
15 Mar 00 | Business
Stock exchange votes to go public
06 Dec 99 | Business
German exchange to demutualise
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