Easdaq is the open sesame to Europe
William Gleeson on the importance of a new market
Saturday 21 September 1996
The the pan-European stock market, Easdaq - European Association of Securities Dealers Automated Quotation - which starts trading on 30 September may change all that. When the market is up and running both institutional and private investors will be able to buy and sell shares in European and American growth companies with the same ease as domestic shares.
The first two companies, Artwork Systems, a Belgian software company, and Innogenetics, a Belgian bio-tech company, have just asked for a listing. The new market is, as its name implies, modelled on the Nasdaq market in the US. It is not a high-risk market such as AIM run by the London Stock Exchange. For admission to Easdaq, companies will have to fulfil entry requirements closer to those required by the London full list or the New York Stock Exchange rather than the scantier requirements of AIM. Companies must have the backing of sponsors, who will be liable for ensuring that the flotation prospectus and ongoing trading statements and results announcements meet full blown US GAAP or International Accounting Standards.
The sort of company they want to see on the market is likely to have a trading record and a management with a proven track record. It may well be active in European markets and may want to benefit from an increased profile overseas. By listing on Easdaq, companies will get exposure for their press releases on results, trading conditions, contracts and prospects in newspapers across Europe.
Almost by definition, a multi-national market will be bigger than any one national market. There will be more investors than in any one country's stock market - a point which is particularly true for Continental growth companies. This means more buyers and sellers, which together with the market maker system Easdaq has opted for, should result in higher levels of liquidity or price-earnings ratios than might be anticipated should the same company float on its national market. Consequently capital growth should be more dynamic.
The history of the Nasdaq market in the US is a good omen for its new European sibling. Since its launch in 1974 the main Nasdaq index, the Nasdaq 100, has outperformed the indices of all other main stock markets in the US and Europe. The historical and projected p/e ratios of Nasdaq companies tend to be higher than those of the traditional blue-chip style companies that list on the NYSE.
The Easdaq attempt to recreate the same market conditions in Europe offers the investor an opportunity to scrutinise European companies and a chance to be the first to spot the next Microsoft or Cisco systems. Yet if Easdaq is such a good idea, why has it not been thought of before? At least one part of the answer is that the regulatory framework for the new market has only relatively recently fallen into place with national governments enacting the principles in the EU's Investment Services Directive and the Prospectuses Directive.
Under the ISD, recognition as a stock market in one EU country means that recognition is automatically granted in other EU countries. The same goes for the financial intermediaries. A stockbroker authorised by one financial regulator in the EU has the automatic right to trade throughout Europe.
It is the same for issuing a prospectus to raise money on a public stock market. Approval of a prospectus in one country means the same document can be used across Europe.
European stock markets have been nationally focused and concentrated on events within their own borders. Nowadays though, much business is conducted in an multicultural and indeed global context. Companies are seeking to integrate the way they operate across the world. Indeed the buzzword among management consultants is "globalisation". Once the trading mindset is in place it is not a big leap to deciding to try to raise capital internationally.
Whether there is an appetite for the new market in Europe is something that only time will tell. Traditionally, Europe, with the exceptions of Sweden and the UK, has not had a strong equity culture. Companies have been family owned and the state has been sufficiently generous with pensions to forestall the need for a large and active stock market for pension funds to invest in.
However in a recent report, Flotations in Continental Europe, HSBC James Capel speculates that this was about to change The pensions issue is at the top of the political agenda in many European countries. Europe, says the report, is set to be the next emerging market.
As if to prove the point, fund manager M&G has announced a new European smaller companies fund. It believes the time is right to launch what it is hoping will prove to be one of their mainstream funds, attracting pounds l00m- plus from investors. Easdaq, believes M&G, will create the interest and liquidity in smaller companies shares on the Continent that has been missing to date. The offer for the fund opened on 10 September and the fund starts trading on 30 September, the day Easdaq expects to open its doors for business.
Easdaq is clearly a radical idea. It may even be controversial. One can foresee the Eurosceptics getting upset.
All states need their institutions, including economic ones like central banks and stock markets. Commentators of the future may look back to this autumn and conclude that Easdaq was as vital a step in the creation of the European superstate as the common currency.
But might it all, eventually, go further? Could there one day be a Globex - a world-wide stock exchange, open 24 hours a day with dealers trading on the same screens whether located in Sydney or San Francisco? At the moment all that is preventing a Globex is the regulatory framework.
New essay by JK Rowling went live on Pottermore site on Friday
New UK station Russia Today gives a very bizarre view of Britain
01 November 2014 12:00 AM
25 October 2014 12:22 AM
Ever wanted to hold to account a company you invest in, but didn't know how to go about doing it? Simon Read shows how individual shareholders can make their voices heard
25 October 2014 12:38 AM
'A third extra for free', gift sets, recommendations for a present for Grandpa - just some ways to make you pay more than you intended
17 October 2014 07:45 PM
The ethical investment industry is giving itself a makeover, but the problem seems to lie more with getting its message and its methods into the mainstream
17 October 2014 07:08 PM
Going down the wrong road: parking fines are nudging people into debt difficulties
17 October 2014 07:58 PM
Stacks of income: Drax is among the companies in Neil Woodford’s portfolio that he believes will pay strong dividends
17 October 2014 07:23 PM
Don't panic, it’s a wise idea to check investments regularly to ensure they are on target for your hoped-for returns
17 October 2014 08:18 PM
With little or no wage growth being seen in the UK, increasing house-price inflation could see the number of first-time buyers slide further, unless there’s a new accelerated house building programme
17 October 2014 07:19 PM
You should ignore the headline offers and trickery and work out the total cost of borrowing under different deals
17 October 2014 07:24 PM
Denise Leigh, who appeared in a production of Rigoletto with Alan Opie, was left without an essential service
10 October 2014 06:13 PM
A charity has calculated the cost to us all of unmanageable debt – from lost productivity to the extra demands on the NHS
10 October 2014 06:36 PM
The regulators are at last tackling the high-profile payday lenders, but they appear to be ignoring the growing problem of internet loan firms
NatWest is taking a stand against payday loan brokers
How to cut the cost of car insurance: A five-step guide to getting a better deal
Donald MacInnes: Think-tank makes me want to watch Brad Pitt blow something up
Families pay the price of superfast broadband
How shops make you spend: The subtle art of the savvy retailer revealed
- 1 'Nasa Confirms Six Days of Darkness in December': No, they don't - it's a hoax
- 2 Canadian actor punched in face after 'Islamophobia' experiment goes wrong in wake of Ottawa shooting
- 3 Woman blinded as a child can see again after hitting her head on a coffee table
- 4 Paul Hollywood: Police asked if I wanted them to arrest Mary Berry for vandalism after she 'defaced' my car
- 5 If you think Russell Brand’s new book is confused, you should read what his critics have to say about it
Pope Francis declares evolution and Big Bang theory are real and God is not 'a magician with a magic wand'
Huge surge in Ukip support after EU funding row, according to new poll
Ukip ‘exploiting grooming scandal’ to secure party’s first police chief
Nigel Farage: 'There’s nothing wrong with white people blacking up'
Maureen Lipman says 'she can't vote Labour while Ed Miliband is leader'
Muslims, immigration and teenage pregnancy: British people are ignorant about almost everything
iJobs Money & Business
£18000 - £23000 per annum + Comission: SThree: SThree, International Recruitme...
£20000 - £25000 per annum + OTE £35K: SThree: We consistently strive to be the...
£20000 - £23250 Per Annum pro rata: Clearwater People Solutions Ltd: Pro rata ...
£40 - 48k + Benefits: Guru Careers: We are seeking a Marketing Manager to join...
Day In a Page
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000