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Friday, 15 December, 2000, 09:59 GMT
Stock exchanges merge
This year saw a slew of significant mergers and alliances as global stock markets tried to increase their efficiency. And the trend looks set to continue, as BBC News online's Jorn Madslien reports.
National pride, disagreement on regulatory issues and technological problems limited progress on stock market mergers.
Investors want liquidity, diversity and easy access at low prices, within the euro-zone and beyond.
The stock exchanges are trying to deliver, but they are not quite there yet.
Swedish pitch for London
The most outrageous story of 2000 was the bidding war for the London Stock Exchange (LSE), Europe's largest stock exchange, and the world's fourth biggest.
It had originally planned to merge with Germany's stock market, the Deutsche Börse, to form the iX exchange.
But that was upset in August when an upstart Swedish group entered the battle.
OM Gruppen was not exactly a household name at the time, but its hostile takeover bid for LSE quickly changed that.
In its 15 year history, OM Gruppen has grown from a pioneer in electronic trading to a company with a valuation of £2.6 billion - three times the value of the LSE, yet few knew much about the group ahead of the pitch for the UK exchange.
An end to iX
In London, OM's bid did two things:
It attracted more bidders for the London exchange.
And it brought down LSE's merger plans with Deutsche Börse.
Though the London and the Frankfurt exchanges are still communicating, the tone between them is no longer friendly.
In December, it materialised that Deutsche Börse is seeking 10m euros in compensation from the LSE for breaking off the merger talks.
The sum is equivalent to about 12.5% of LSE's pre-tax profits last year.
LSE is refusing to pay.
Deutsche may be forced to pursue the claim through the courts.
But before it all turned this sour, the German stock exchange's chairman, Rolf Breuer, said that if other European stock exchanges joined in - notably the Italian and the Spanish bourses - then a joint bid for LSE could be formulated.
At some stage, there was even talk of a joint bid by OM and Deutsche, though in the end none of these materialised.
Nasdaq enters the stage
Once Per Larsson and his men had returned to Stockholm, the world's biggest exchange for shares in technology companies, the US-based Nasdaq, turned up with a proposition of its own.
When London and Frankfurt broke off their talks, Nasdaq was left hanging without a European partner.
In November, Nasdaq approach LSE with an eye to creating an "agile and flexible" London exchange, with links between LSE and London International Futures Exchange (Liffe).
This would be a third hub, supplementing its own exchanges in New York and Tokyo, to create a global exchange that would offer 24 hour trading.
Observers believe anything from a limited alliance to a hostile takeover bid from Nasdaq remain possible.
Though equally likely; Nasdaq may turn its attention to Deutsche Börse as an alternative partner if talks with LSE fail.
Deutsche, in turn, has plans for an initial public offering early in 2001, aimed at raising funds for future investments and at building acquisition capital reserves.
LSE insists it can go it alone, with its pan-European market for growth and technology stocks - in direct competition with Germany's Neuer Markt, which is run by Deutsche Börse, and to some extent in competition with Nasdaq.
Yet another scenario would be an alliance between London and the newly merged smaller European stock markets known as Euronext.
Euronext approached LSE during the autumn, and cooperation between these exchanges in the future remains possible.
A European exchange
The Euronext merger, between the stock exchanges in Paris, Brussels and Amsterdam, was a fairly painless event that in March built the framework for Europe's first integrated cross-border single-currency stock and derivatives market.
But this horizontal consolidation process, with a single trading platform across a range of markets, was a far cry from the boldly announced European stock exchange, envisaged when as many as eight exchanges said they would form an alliance back in 1998.
That goal had been proven more difficult than expected, so the Euronext members settled for a more viable, though less spectacular, venture.
Although the Portuguese exchange also expressed an interest in joining - the Italian and Spanish bourses had favoured iX.
By June, Euronext had entered into an alliance with the New York Stock Exchange and the Tokyo Stock Exchange, as well as with exchanges in Australia, Hong Kong, Toronto, Mexico and Brazil. The bourses planned to create GEM, the Global Equity Market.
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