Bourses link up to form Euronext exchange

The Paris, Amsterdam and Brussels stock exchanges yesterday confirmed their intention to merge in a move which could herald the eventual creation of a single pan-European shares market.

The enlarged group, to be called Euronext, will be Europe's second-ranked stock exchange after London with its companies worth a combined 2.4 trillion euros (£1.62 trillion).

Jean-François Théodore, the president of the Paris stock exchange, and the first head of the merged business, said Euronext was open to wider membership. He said: "We have a strong commitment to growth with acquisitions and mergers.... It is open to any European exchange to join. And it is especially open to London-based institutions."

A spokesman for the LSE, which last week voted to demutualise and list as a public company, said: "The announcement of the merger between three European bourses confirms our view that consolidation of exchanges is the way forward."

Analysts say the demutualisation vote paved the way for the UK group to take part in international mergers. Luxembourg has already expressed its intention to join Euronet at a later stage.

The three merging exchanges are already part of an alliance of eight European Stock Exchanges, also including the LSE and the Frankfurt exchange, which have been exploring ways to forge closer links. Mr Théodore yesterday said that Euronext remained committed to the partnership, whose representatives are scheduled to meet in Brussels tomorrow.

Euronext, will officially be incorporated as a Dutch company and plans to float by the end of the year. The merger is expected to be completed in September and full operations will be under way by the end of March 2001.

The formation of the new exchange comes as national stock markets face competition from online brokerages and the US Nasdaq's plans to create a European exchange.

Euronext will provide a single platform for listing and trading in equities, bonds and derivatives, clearing, settlement, custody and netting - which cuts the costs of setting aside capital to cover market positions - for its initial 1,300 users.

The exchange will have a two-tier governance structure. A supervisory board of 12 will represent the interests of all participants, including investors, and the managing board will comprise Mr Théodore, who has been mandated for four years as chairman and chief executive, George Möller, the current president of the Amsterdam Exchanges who will act as Euronext's chief operating officer, and Olivier Lefebvre, president of the Brussels Exchanges as Euronext's new general secretary.