Straight talker takes helm of combined exchange

Werner Siefert sees today's expected merger of the LSE and Deutsche Borse as a springboard to greater things
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The Independent Online

Werner Seifert, who is expected to be confirmed today as chief executive of the combined London and Frankfurt stock exchanges, is a forthright man who has made clear his desire to take charge of the new body.

The deal, which has been presented to the outside world as a merger of equals, caps an extraordinary career which has taken Dr Seifert from heading an antiquated European bourse to being the prime mover behind what now has every chance of becoming the world's premier trading exchange.

Dr Seifert, 50, is also known to believe that the deal he has been seeking to strike with London is a staging post on the way to a wider global deal involving Nasdaq, the American technology exchange. There was talk yesterday that once the Anglo-German move was bedded down the intention is to swap roughly 10 per cent of the combined equity with Nasdaq.

Don Cruickshank, the recently appointed London Stock Exchange chairman with, whom he has struck a good relationship in the course of thetalks, is likely to remain as a non-executive - although he will almost certainly be keeping Dr Seifert on his toes. The two share a similar pedigree, both having served their time as Mckinsey consultants before going into industry.

The fact that Dr Seifert is Swiss may explain some of his determination to get over the petty nationalisms that have bedevilled previous attempts at consolidation between European markets. Plucked in 1993 from Swiss Re, the insurance group to run the German stock exchange, he was quick to see that new technology would make a nonsense of borders and whoever grasped that soonest would hold the key to the future. He was also quick to see the opportunity presented by the hi-tech boom, creating the Neuer Markt, now second only to Nasdaq as launch pad for start-up tech companies.

His faith in technology was vindicated when, in 1998, in the run-up to the single currency, Eurex, the screen-based Frankfurt futures market which the German stock exchange jointly owns, was able to grab the highly symbolic bund futures contract from Liffe, the City's flagship futures exchange. Liffe is now fighting back having expensively learnt its lesson and ditched open outcry in favour of electronic trade.

But while many both in London and in Frankfurt have seen this battle as one of two warring financial centres, Dr Seifert has known all along that to talk in such simplistic terms is nonsense. The technology that won that battle did so because it permitted dealers to trade on Eurex while remaining in London or Chicago, paying UK or US taxes and driving local house prices through the roof.

Technology is again one of the drivers in today's deal. Xetra, Frankfurt's low-cost cash equity trading system is expected to be used as a platform for a London based pan-European big cap market, while the Neuer Markt becomes the basis of a technology market for the whole continent. Dr Seifert recently upset German sensibilities by suggesting that come what may their exchange would have to increase its physical presence in London. He has never had any doubt that while Germany is an interesting and growing market, London would have to be at the core of any attempt to create a global stock exchange.

But also that London itself would have to change if it was not see its prized leadership in financial services go the way of Britain's former leadership in other markets from shipbuilding to textiles has gone. One stock exchange observer said yesterday: "He has always seen London as the way to the top table and he wants to be at the top table." Despite an obvious personal ambition, Dr Seifert unlike his counterparts elsewhere in Europe has not allowed visions of empire to blind him to the essential truth that it is what customers want that counts. He believes Frankfurt's success in embracing technology yoked to London's clout in global financial markets will enable the new entity to avoid the fate of the American stock market, which he says has been "balkanised" by the growth of parallel quasi-exchanges called Electronic Communications Networks or ECNs. When challenged by critics who say the exchanges are going to be pushed into the dustbin of history by the ECNs, he always replies: "But we are already an ECN."