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Wednesday, 3 May, 2000, 11:22 GMT 12:22 UK
Analysis: A marriage of equals
Frankfurt trader using Xetra system - İDeutsche Börse
London traders will have to learn Germany's Xetra trading system
The merger of the stock exchanges in London and Frankfurt is a marriage of equals, says BBC business report Jonty Bloom.

After a two year on-and-off-again romance the German and British stock markets are to tie the knot at last.

The news is a massive step on the way to creating one European Stock market.

At the moment every country seems to have its own, with its own rules, bureaucracy, management, currency and computer system.

European single share market

Given that Europe was supposed to have had a single market since 1992 and a single currency since the beginning of 1999 this did not seem the most efficient way of organising things.

Now that Frankfurt and London have finally agreed to merge, with a market called iX, others will doubtless soon join.

Milan and Madrid are already in the new exchanges sights, after a while are very likely to join too, after all it may seem pointless to stay out of what will be a real competitor to the dominance of the American stock market.

Hip high-tech

There will even be a tie in with the hip high-tech American exchange Nasdaq; with European high-tech shares to be quoted in Frankfurt and blue-chip ones in London and preventing Nasdaq from opening a rival European exchange of its own.

It is also interesting that this is a marriage of equals. Frankfurt and London are getting half each of the new Exchange, even though London is a much larger market. The Deutsche Boerse's computer system will be the common platform.

And although the headquarters will be in London, it also seems likely that iX will become increasingly dominated by shares quoted in euros.

Trading in euros

The outgoing boss of the London Stock Exchange, Gavin Casey, said it would make sense for all companies on the merged bourse to list in euros in the future.

In Britain that will doubtless be viewed by some as yet another sign that sterling is being pushed into the euro by the back door.

But for others it will be taken as a sign that the euro is succeeding in at least one respect.

It may have yet again hit new lows against the dollar on Wednesday, the latest in a long line of new lows.

Making it, to say the least, a failure as a strong currency.

But if it is having an influence in bringing together the fragmented and disparate stock exchanges and bourses of Europe, allowing companies to deal and trade in one currency, removing all those other small inefficient exchanges, it is fulfilling at least one of its functions.

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